Financial Literacy  101

Why It Is Important

Financial literacy is important because it equips us with the knowledge and skills we need to manage money effectively. Without it, our financial decisions and the actions we take—or don't take—lack a solid foundation for success.Society is becoming increasingly dependent on credit to make purchases and financial decisions. A good credit score is used for more than just getting a credit card or a loan. Credit scores demonstrate your history of paying your debts to entities that loan you money.  Due to extending themselves beyond their means, many people are not able to pay their debts. At the same time, general living expenses take a toll on people's paychecks. Businesses have good reason to insist you have good credit before providing products or services on credit. Some employers are even beginning to run credit checks to see if you can be trusted with company finances or assets. If you have a history of not being financially responsible, you may run into problems finding work.

Di d You Know

"Credit Can Affect Where You Live"

Before you can buy a house, mortgage lenders want to know that you won’t default on your mortgage. If you don’t have good credit, the lender will consider it risky to give you a mortgage loan. If you're approved for a mortgage, your credit affects your interest rate. Interest rates directly impact your monthly mortgage payment, by either increasing or decreasing the amount you are charged. Low credit scores will cause a loan application to be disapproved, or approved at a higher rate. While you may not currently be in the market for a house, your credit is still important. Landlords also use your credit to decide whether to rent to you. Property rental is considered to be a loan, and owners want to be sure they will be paid.

Did You Know

"Credit Checks For Employment"

Many employers conduct credit checks as part of the hiring process. (Note that employers check credit reports, not credit scores.) If you haven’t demonstrated financial responsibility, a prospective employer might be hesitant to hire you. For example, the employer might believe your level of debt is too high for the salary offered. Some employers also check credit scores before giving a promotion or raise, especially for financially-related or executive positions.

Did You Know

"You Need Good Credit To Live Comfortably"

Since your credit is defined by how you’ve paid (or not paid) your bills in the past, many businesses—landlords, mortgage lenders, utility providers, and even employers—use your credit to predict your future financial responsibility. Anytime you need to borrow money, finance an essential item, or set up services, your history of paying bills (your credit) is called into question.

Did You Know

"Auto Loans Require Good Credit"

Most people do not have the money to fund a vehicle and cover living expenses at the same time. Many will apply for an auto loan. Your credit rating affects whether you are qualified, the amount you can receive, and the interest rate of the loan. Generally, loan applicants with a higher credit rating can qualify for larger loan amounts with lower interest rates. A low credit rating will limit your choices. Few lenders will work with you if you have low credit—those that do will charge a Business Loans Require Good Credit

Many people have dreams of starting their own business. Most business startups require a sizable amount of cash that you might not have available. In that case, you’ll need to obtain a small business loan. Among other things, you need to have good credit to qualify for the business loan.much higher interest rate on your auto loan. A higher interest rate will significantly raise the amount you pay monthly on the car, which raises the total amount you pay over time.

1. The Basics of Budgeting

Creating and maintaining a budget is one of the most basic aspects of staying on top of your finances. In this modern day, it’s easier than ever to create a budget with the help of websites and apps. It doesn’t matter if math isn’t your strong suit - thanks to these user-friendly tools, everyone can get help with keeping their finances on track. And, when utilized properly, they'll keep you in the know about where your money is actually going. Without following a budget, it’s difficult to hold yourself accountable on where your money is coming from and what it’s going toward, so mastering the basics of budgeting is where any financial novice should begin.

2. Understanding Interest Rates

While you may touch upon the concepts within a mathematics course, it’s important to understand different aspects, like compound interest. Why? Not only can it help you save even more, but it can make the difference between borrowing a small amount and paying back much more than you need to for years to come. Understanding the ins and outs of interest can impact your finances more than you likely realize, so it’s an important concept to gain a better understand of early on in life.

3. Prioritizing Saving

Obviously, saving is an important aspects of maintaining a healthy financial situation. But, the majority of students don’t prioritize this aspect as much as they should. It’s easy to ignore things like retirement since it seems so far off in the future. Learning to save early on can help you gain the knowledge, practice and set of skills you’ll utilize throughout your entire life. Beginners can start working on this concept in the simplest sense, like saving money for a higher-ticket item they desire. Working toward a goal is key here and students need to understand that there’s a lot of value in paying yourself first – because the bills will always be there. Having peace of mind? Well, that comes with practice, diligence and patience, all qualities you’ll develop when mastering your savings skill set.

4. Credit-Debt Cycle Traps

Meaning: it’s much easier to lose credit than gain it and many students don’t realize how easy it is to ruin their credit – and how difficult it can be to regain credit – before it’s too late. That’s why it’s crucial to provide knowledge on debt earlier than later. Credit can be an extremely useful tool – if it’s managed correctly. Making rash decisions when you’re young can end up costing you throughout adulthood so it’s important to grasp the concepts and tools behind responsible credit practices as early on as possible.

5. Identity Theft Issues & Safety

In this modern day and age, identity theft is more prevalent than ever. Since everything is digital and just about everyone has shopped online at one point or another, your financial information is more vulnerable to fraud. Understanding this concept, along with preventative measures, like password protection and limiting the amount of information shared online can be the key to maintaining safe accounts or, inversely, can lead to financial ruin.

While it’s not a fool proof science (people can be safe and things do still happen) it’s important to safeguard your finances as best as possible to avoid the threats that exist.

What our customers are saying

I am scheduled for the 2020 credit counseling classes an I am looking forward to telling my story  along with my experience in the classes.

David M. Smith - Smith Hauling, LLC