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Beginners Guide to Financial Literacy | How to Set Yourself Up For Success  

January 26, 2022

Building strong financial literacy may prepare a person to achieve more with their money, provide financial peace of mind, and help to create stability well into retirement. Yet, many people simply do not have access to the necessary tools and resources to learn how to make wise financial decisions through no fault of their own. For those who are beginners and want to learn – whether kids or adults – here are some tips and strategies to help you do just that.

At Goodwill Industries of Monocacy Valley, we take pride in helping people achieve financial health by finding jobs that fit their needs. We also offer job training to help people improve their ability to achieve financial health. More on our programs and services in a moment.

What Is Financial Literacy?

Financial literacy is the ability to understand and make wise decisions about finances. It is about banking, budgeting, and using credit wisely. It is also about saving money and investing it to grow income over time. People make many financial decisions throughout their lifetime, and often every day. It may be possible to make better decisions that create a stronger future with good financial literacy.

To become financially confident, it’s important to start with the basics of personal financial management. That includes learning how to budget and invest money to achieve long-term goals. It’s also important to understand how to manage debt, what compound interest is, and the value of money.

financial literacy infographic

How Do You Get Started?

There are numerous options for beginners who want a fresh course and outlook on gaining financial wisdom and skill. It is not common for personal finance courses in school to provide enough information and insight to support decision-making today. Yet, there is much you can do to educate yourself at any point.

Utilize government programs to help you

One of the best tools for many people is to use the numerous resources provided by the U.S. government for building financial health and wellbeing. The U.S. Financial Literacy and Education Commission offers insights and supportive resources as a starting point. Check out their website MyMoney.gov to gain more support for beginners. Another resource is the Federal Deposit Insurance Corporation’s Money Smart program. Other government programs exist as well.

Consider kid’s programming

From YouTube to various government programs (including MyMoney.gov), there are a number of resources available to teach kids how to better manage their money and make better decisions over time.

Parents may find it valuable to provide children with a solid understanding of financial management now, even when they are in elementary school. What they are taught in school is likely to carry over into adulthood, allowing them to make wise financial decisions.

Where to Begin Implementing Change

To succeed at financial literacy, individuals have to commit to creating change in their lives. Through a wide range of resources and tools, it is possible to change the outcome of most lives. Here are some steps to take to get started.

Start with a budget

To succeed at managing money wisely, it is always necessary to have a budget. It works as a roadmap and a tool that enables you to make good decisions about how you are spending money. Some of the benefits of budgeting include:

  • Learning how to create a budget that allows you to spend only what you are making, reducing the need to create debt
  • Learn the value of money based on how far you can make every dollar stretch
  • Explore how everyday decisions about spending – from grabbing a coffee on-the-go to eating a meal out – impacts the overall financial picture for your family
  • Find out how to create a budget that’s balanced that also includes money set aside for other needs, including things like entertainment and savings
  • Gain the skills you need to make wise financial decisions based on putting money where it is going to make the most difference in your life

There are many tools online to help you to create a budget. A good starting point is Consumer.gov, a division of the U.S. Federal Trade Commission.

Start tracking your spending

For beginners, having a budget is just the first step. It is also necessary to have a way to track your spending so you know what you are spending money on each week and month. In fact, you may need to do this in order to know how to create a budget.

Spend tracking takes some time. It’s important to use a tool that you are comfortable with and that you will use on a consistent basis. The good news is there are a lot of options to help you to do this.

The easiest option is to use a pencil and paper. Write down how much you spend through every transaction each day. This can become cumbersome especially for those who may be busy and unable to track each purchase.

You can also gather all credit card statements, receipts, and bank account statements to look at for the week. Be sure you keep track of how much cash you are spending as well.

For those who want a faster option, it may be possible to use an app. There are many of them available at no cost. Be sure you choose one from a reputable company. Once you have it in place, use it to document what you are spending on a regular basis.

Establish yourself with a bank or credit union

There are many benefits to having a bank or credit union in place to help you with tracking your income and managing your budget. You’ll need to do this if you want to create a savings account. These organizations offer free or low-cost ways to help people control their spending, including various tools and apps to help you know where you are spending.

Use them to set up a simple checking account and a savings account. Then, work to manage your money in these accounts, so you have a single tool to keep you organized.

Learn to use debit and credit cards wisely

This guide is all about creating financial health. Part of that is not just in keeping your expenses in line with your income but also in building credit wisely. Credit is a valuable tool today and not something that most people can avoid using at some point in the future. It’s quite important to know how to balance your use of credit to help improve your credit score while not putting yourself into too much debt.

For beginners, whether adults or kids, having a guide to help you in making wise decisions is important. At Goodwill, we are committed to helping you achieve financial health so we are now offering an online financial literacy course. Our financial literacy course can help to provide a basic understanding of banking, credit, financial goal setting, budgeting and saving.

If you are ready to earn more and build a stronger financial future, sign up for free today.