According to USNews, 78% of Americans live paycheck to paycheck. This means, around 250 million Americans would be unable to meet financial obligations if unemployed because his or her salary is predominantly devoted.
An article from Forbes also revealed that student loan debt is US$1.5 trillion for more than 44 million borrowers. Carrying student debt may impact many areas of life from buying a home to saving for retirement, therefore resulting to lower credit score and lower net worth.
On the other hand, USAToday reported that credit card debt is up to a record of $1.04 trillion which is really high. High credit card debt can drive a low credit score which impacts the ability to get a low rate on loans. This leads to paying higher interest on loans which impacts a person's available cash flow. Having bad credit affects the ability to get a job or the ability to rent. Not only does it affect spending ability, but it also has a direct impact on the credit score and a direct impact on the ability to borrow money or pay low on insurance rates.
On CNBC, an article said that 21% of Americans aren’t setting aside any money for short-term or long-term goals. Apart from minimizing procrastination, short-term goals lay down a clear and defined path to success. This helps you focus on one thing at a time so you stay motivated and productive, therefore helping you achieve your long-term goals much easier.
These are only some of the financial challenges people face and as the whole world faces economic recession due to the pandemic, it is badly needed nowadays to immediately address these issues and step up efforts to load up ourselves with financial education.
What does it mean to be financially literate?
A financially literate person possesses the knowledge and skills that allow him or her to make effective and informed decisions with all of his or her financial resources. It means someone has an understanding of essential financial concepts such as budgeting, saving, credit, debt, and insurance, to name a few.
Financial literacy empowers us to make smart financial decisions. It allows us to manage money effectively, from budgeting and saving to borrowing and investing. We’re better equipped to reach our financial goals and achieve financial stability if we are financially literate.
Why is financial literacy important?
Financial literacy equips people with an understanding of basic financial concepts to inform their real-world financial decisions. People who possess this knowledge are able to manage their money better. They are also able to make sound decisions and maintain healthy spending and budgeting habits, which over time can lead to financial wellness.
How to become financially literate?
A person acquires financial literacy by learning financial concepts and practicing them. There are also people who receive informal financial education from their role models or family members. However, if you want a more comprehensive and reliable education, you need formal financial instruction or knowledge from a trusted provider or an institution. A few of the sources for formal financial education are schools, banks, and nonprofit organizations. There are also online resources that offer financial literacy ad they are relevant nowadays, amidst this pandemic. Apart from online resources are free financial tools or calculators that can be used for figuring out loan/debt payments, estimating investment returns, or just about any other important financial decision. They can be very helpful, too as you can access them online, at the comfort of your home.
If you are one of those who are now in debt, you might want to check this debt payment calculator. You can use this calculator to figure when a given debt will be paid off along with how much interest you will spend on the debt & the average monthly interest.
Calculations update automatically when any variable is changed. The calculator will inform you to increase your payment amount if payments are insufficient to cover the interest expense.
This Pigly calculator also offers a lot of financial-related articles, interesting tips on money management, savings, investments, loan, repayments, retirements, and more. The site educates the readers with almost everything they need with regards to finances or financial. It's a very comprehensive site that will help us be armed with tools for financial literacy. The site is very user friendly and the instructions are easy to understand. This can be our day-to-day guide to managing our finances better, especially in this trying time.
Have you tried an online calculator for money management? How do you like it and how helpful is it in your daily life?