- According to research from the Global Finance Literacy Excellence Center, 63 % of Americans are financially illiterate.
- Managing your finances well better positions you when unexpected expenses arise or if you suddenly lose your job.
- The younger you are, the greater the benefit of compound interest.
The most important investment you can make is investing in you and perhaps one of the best ways to do that is learning about personal finance. Managing your finances well better positions you when unexpected expenses arise or if you suddenly lose your job. You can also tackle debt more easily such as student loans and save more aggressively for retirement.
Poor money management, on the other hand, can be costly. For example, a low credit score means higher interest rates on credit cards, car loans, mortgages and more. The higher the interest rate the more you'll pay for what you buy compared to someone with a good credit score.
If learning about personal finance feels intimidating, you're not alone. According to research from the Global Finance Literacy Excellence Center, 63 % of Americans are financially illiterate and while becoming financially savvy requires effort and attention, it is doable.
Think of your financial health like your physical health. Just as you need regular check-ups with your primary physician, you'll also need to check in with your finances. Check your bank and credit card statements for accuracy. Once a year, also check your credit report and flag anything inaccurate to the proper credit reporting agency. Every few months, check to see where your money is going. If you have a budget, check to see if you're on target. If not, maybe the budget needs some tweaking to make it realistic.
It's also important to make your savings goals attainable. If you have nothing saved now start small, however small you need to create a habit of saving. The younger you are, the greater the benefit of compound interest. Defined simply, compound interest is the interest you earn on interest. The longer you can keep your money growing with compound interest, the greater your return.
Commit to educating yourself about your finances, the future you will thank you for it.
Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.