June Topic of the Month: Why is it important to be financially literate?
You might be familiar with the concept of literacy—or the ability to read—but do you know what it means to be financially literate? According to the President’s Advisory Council on Financial Literacy, financial literacy is “the ability to use knowledge and skills to manage financial resources effectively for a lifetime of financial well-being.” In other words, being financially literate means, you can create and execute a long term vision and use your skills every day to work toward your financial goals.
Why is it so important to become financially literate? Well, let’s compare it to traditional literacy: we spend years teaching children to read and write because those are skills children need to succeed in school, the workforce, and life. Financial literacy is no different, only we don’t teach it in the traditional way. Thus, it falls on the shoulders of individuals to develop their own financial literacy.
Financial literacy has become increasingly important in today’s generation due to the prevalence of credit. In previous generations, folks relied primarily on cash, but credit cards, banks, and other lending venues have created so many options for credit that the lack of financial literacy can land folks deeper in debt than ever before.
Financial literacy encompasses more than just managing your debt, though. It is also a consideration of how to budget, creating an emergency fund, planning for retirement, and having a savings account. Understanding how all of these parts work together can help you prepare for your financial future. Learning how to manage your financial resources and putting those skills to use will best prepare you to make more financially literate decisions. Developing financial literacy might feel overwhelming, but it doesn’t have to be! We at Orsinger Investment Group, Inc. at (724)588-9067 are here to help. Call us to schedule a conversation about how to improve your financial literacy.