by Trevia Chatman —
Financial literacy, or the ability to make sound financial decisions, can significantly impact a person’s future. I hope readers will be encouraged this National Financial Literacy Month to learn the basics of personal finance, taxes, and more.
One of the most important aspects of financial literacy is personal finance, which can include budgeting, saving and spending. Every budget is different, but there are a few ground rules everyone can use when thinking about personal finance.
First, keep track of your income and expenses. While this might seem simple, many Americans end each month wondering where all their money went. Instead, try using a budgeting tool to get a handle on your spending habits, then set some basic goals, such as building an emergency fund.
While it’s difficult to plan for every outcome, having a little bit of money set aside can make a stressful situation much more manageable.
Understanding debt is also crucial to becoming more financially literate. While some debt, like a home mortgage, may make sense long-term, you’ll want to pay off your credit card debt as quickly as possible because interest on the debt will continue to pile up.
Many websites offer free calculators to give you an idea of just how much you might be paying in interest each month. Not only will paying off credit card debt save you money on interest, but it will also free up that money to be used on things you enjoy.
Finally, it’s a good idea to educate yourself about the basics of your tax situation. Tuesday, April 18, is Tax Day, and if you haven’t filed your taxes yet, today is a great time to get started.
Putting your taxes off until the last minute is a bad idea, especially if you have a more complicated return. However, you still have time to ensure you get them done right.
Take the time to understand your Tennessee and federal income tax obligations, as well as the deductions and credits you may be eligible for. If you have any questions, make sure to contact a tax professional. They can answer your questions and help you avoid trouble with the IRS down the road.
If you want to improve your financial health and meet your goals, I recommend using our Better Money Habits program to determine your financial priorities and find the right resources for your stage of life. Here in Memphis, organizations such as Bank On Memphis, Memphis Urban League, and Agape Child and Family Services are valuable resources that can lead you on the right path during your financial health journey.
Best of luck with your financial literacy journey and happy National Financial Literacy Month!
(Trevia Chatman is president, Bank of America Memphis.)