Did you know that there is such a thing as being financially literate and illiterate? Based on some research data from the Financial Industry Regulatory Authority it’s very true! They found sixty-three percent of Americans are financially illiterate. This means that they lacked the basic skills to reconcile their bank accounts, pay bills on time, pay off debt, and plan for the future.
Being financially illiterate can lead to the road of bankruptcy. Hines Law bankruptcy attorneys can help.
When there is a lack of financial literacy, it can lead to making poor financial choices that can end up having negative consequences on the financial well-being on an individual. The federal government has created the Financial Literacy and Education Commission. It provides resources for people who want to learn more about financial literacy.
According to the National Financial Educators Council, to be financially literate means to have the ability to use knowledge and skills to manage one’s financial resources effectively for lifetime security. When it comes to managing your money, a budget is a necessity. It begins by taking a close look at your net income. This is after all deductions, taxes, etc. have been taken out. It’s the amount you take home. This is your starting point.
The next step is to track your spending. Really zoom in on where the money goes and to be thinking where adjustments can be made. First make a list of fixed expenses. These are the ones that are constant and must be paid. This includes your rent or mortgage, utilities, car payment, credit cards, and insurance. You might need to add travel costs to and from work, whether it’s gas or bus fare. Another list to generate is for variable expenses. These fluctuate in how much you spend, such as groceries, entertainment.
Goal setting needs to follow. Set them for both short term (that can be paid off within a year), and long term. These aren’t set in stone but be sure you identify your priorities. Strongly consider what are your needs and what are the wants (can you really live without it).
The next step is to make a plan for your monthly spending. Your fixed items are pretty clear. The remaining money needs to used for those variables. Food is a big part of this. Reflect and plan out menus, utilize left overs, check sales to make that portion of the budget as cost effective as you can.
When you review your budget on a regular basis, you might find ways to cut back, eliminate some things. It can be surprising how making just one minor adjustment can save money. You will also watch that you’re staying on track with in fluctuations in pay or fixed expenses. You may find you’ve reached a goal and can then plan for the next one.
If being in financial distress is affecting your personal finances, Hines Law can help. Our Full-Service Bankruptcy Firm handles all types of personal debt relief matters. Throughout the years, we have been privileged to serve clients in Framingham, Watertown, Westborough, Worcester, Leominster, and beyond.
Our expertise includes Chapter 7 and Chapter 13 filing as well as assisting our clients implement a plan to rebuild their future. Experience and extensive knowledge in bankruptcy is at the core of our practice and our commitment is to safeguard your interests and your future by providing the right solution for your bankruptcy case.
Call us today for a Free consult!