By Janna M Hall
Financial literacy remains an integral part of ensuring a bright future for ourselves. For a large part of our lives, we’re taught that education is key, but only as it pertains to information in our school books. Math, science, literature, and history frame our early and late childhood education curriculum, and after we graduate, we’re left with mounds of information we’ll probably never use again. Financial literacy, however, is crucial to our success as adults. Understanding how to budget, develop a savings plan, build your credit, and invest in your financial future are some of the most commonly recurring aspects of adult life that unfortunately, we’re forced to learn as we go. It’s not until we’re greeted with these responsibilities that we must quickly learn and decide what’s best for us. What we end up with is increasing debt, poor credit—or none at all—and a lifetime of working for our money instead of having it work for us.
That’s why financial literacy is the true key to success. What good does it do to work hard your entire life with nothing to show for it? What good is opening a credit card without learning the type of discipline it takes to build your credit and not ruin it? Whether you’re a college student anticipating your first job with a 401K or decades into your career, investing in your financial fitness is always an investment worth making.
The first step in becoming financially fit is establishing goals. What are your problem areas? Do you need to learn to make the most out of what you already earn, or do you have a habit of overspending and need to save more money each paycheck? Perhaps you’ve never truly understood what 401k contributions are all about and want to be sure you’re pouring all you can into your investment account. Or maybe, like many, you want to begin establishing good credit so that goals like homeownership are attainable. Whatever your individual need, start with an attainable goal and begin the process of educating yourself.
Richmond native Ciera Wilson is the Founder of Faith and Finance, a locally run financial literacy blog that provides information on budgeting, saving, and reducing debt. Founding the company with the mission of advancing the Kingdom of God through the proper management of finances, Wilson laces her lessons on financial literacy with applicable scripture and teachings from God’s word.
Faith and Finance also offers digital workbooks, budgeting guides, and group coaching services, to name a few, and her blog posts address various aspects of leading a financially fit life. “Ultimately, I want to be able to help others do the same and start building wealth for families for generations to come,” she says.
Through her coaching, Wilson finds that the most common financial missteps people make are not having a budget, living outside of their means, and continuously incurring credit card debt. Unfortunately, her clientele is a microcosm of the widespread issues we face when it comes to our finances. Whether it’s due to a lack of understanding or lack of discipline, budgeting remains an afterthought for many working Americans. But as Wilson suggests on her site, www.faithandfinance.com, “A budget is creating a plan to tell your money where to go.” Writing out a detailed list of monthly expenses—groceries, gas, bills, mortgage—and comparing them against what we bring in monthly can be quite the daunting task. Oftentimes, it’s taxing to discover that when it comes to expenses versus income, we’re falling behind. Other times, knowing that we have a surplus after paying bills means that lifestyle changes must be made in order to begin saving. And change is difficult, but it’s so possible. Necessary, even.
The idea of “living within your means” isn’t reserved for those who struggle financially. It’s also for those who make hefty salaries but fail to save. Regardless of your tax bracket, strive to enjoy the now while planning for your future. Frivolous spending satisfies the now, but what are you doing now that will make for a stable life five to 10 years from now?
“Too many fail when it comes to proper finance management because they are living outside of their means,” Wilson explains. “People do this to impress their friends or family or people on social media; the issue runs deep. Many buy things to impress people that couldn’t care less about what they have or don’t have. Everyone wants to look cool, but being cool comes from the inside out, not the outside in.”
Lastly, incurring unnecessary credit card debt paralyzes many while keeping their credit score in full motion—downward. Borrowing more than you can afford to repay negatively impacts your credit and prevents you from making major milestone purchases. Renting an apartment, purchasing a home, or taking out a loan? You’ve got to have credit. But with opening a credit card comes the responsibility of being disciplined. Make monthly payments, keep your balance low, and designate its use for specific purposes.
Julexus Cappell, a junior at Virginia State University, recently opened her first credit card with the hopes of establishing good credit. To do this, she carefully considered what goals she needed to set, and researched the best banks. Ultimately, she went with the bank she had the most experience with.
“I’ve had the same credit union since I was 15, so I chose to apply for one with that bank because I’m already familiar with them,” Cappell explains. “But I also considered what bigger banks—Wells Fargo and Capital One—had to offer. I found that they offer good college student cards and deals, but ultimately, I stuck with the bank I was familiar with.”
After choosing her bank, she set strict goals for herself.
“I’ve planned out my main uses for it, and linked the auto-pay option for small bills,” she says. “It’s convenient to have for those days between my paydays, but I also use it for groceries and gas. I keep a limit and think more about what I’m buying this way and if it’s actually worth it.”
To help keep her finances in check, Cappell downloaded the app Mint. Mint syncs to your bank accounts and tracks your spending in various categories: food, gas, retail, etc. It also sends alerts when you’ve hit spending limits or have exceeded card usage for the month.
“Mint has been a really good way of keeping my finances in check,” she says. “It lets you enter in your monthly bills and creates a budget to show you what you spend most of your money on.”
Though she’s most concerned about overspending, she’s determined to stay on top of it and not spend more than she can pay back.
The path to financial freedom is far from a ladder, but more a jungle gym. You’ll have financial highs and lows, and experience the inevitable setbacks, but keep your eyes on the ultimate goal: financial freedom. Whether through budgeting, cutting back on spending, or developing a plan for establishing credit, make taking the journey to financial freedom a priority this year. What better way to make your life great than to make your finances great?