COVER STORY
FINANCIAL LITERACY: BY THE NUMBERS By Elizabeth Morse Read
Whether you’re trying to teach your children good money habits or trying to break yourself of bad ones, April is the time to test your financial literacy. BACK IN THE DAY, it was fairly easy to keep track of your spending, “do the math” in your head, and set simple goals for planning your financial future. But now, with everything financial being done with the swipe of a smartphone, a click of a mouse, or by relying on automatic deductions and deposits, it’s become too easy to lose track of where your money is coming and going. So here’s a primer on how to get back to basics and take back control of your finances.
Here come the rainy days Remember your grandparents talking about saving for a rainy day? Putting aside money for emergencies or unexpected bills is just as important now, but studies show that 44% of Americans would have a hard time covering an unexpected $400 expense, like a car repair or replacement eyeglasses, simply because
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they never squirreled away “rainy day” emergency funds. It requires self-control, but you should always set aside money each month after paying your bills before you spend it on non-essential expenditures like eating out, splurging on the latest fashions, or signing up for yet another streaming service.
Saving for golden years It’s hard for some to deny themselves immediate gratification in order to put aside money for their retirement years, but it’s a financial discipline that needs to be taken seriously while you’re earning a good income. Your earned income stops when you retire, but the regular monthly bills don’t – and unless you plan on surviving on a very, very frugal lifestyle for the remainder of your years, you need to create serious financial plans now. Unfortunately, the median “nest egg” for
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US households amounts to a little over $5000 – how long would that last? Some people have been able to sock away retirement money in IRAs and pension plans, and everyone can expect regular Social Security benefits upon full retirement age, but in 2018, the maximum monthly payment from Social Security was $2,788, and most people got much less than that. Consult with a reputable retirement planner to figure out how much you’ll need to save every month now in order to supplement your pension and projected Social Security payments later.
Neither a borrower nor a lender be Thrifty Yankees loathe being in debt, yet according to the Federal Reserve, US household debt levels have risen to almost the same levels seen just before
