Financial Literacy Month is celebrated every April. It is both a celebration and a challenge. This month is an opportunity to review your finances and constantly improve them. There are several reasons why the name is as important as ever. During Financial Literacy Month, financial institutions, organizations, and agencies focus on the importance of financial literacy. They do this through events, programs, and counselling. The goal is not only to help people learn more about finance, but to help them improve their personal and household financial stability.
Simply put, if you are financially literate, you are smart with money. You make smart choices when it comes to budgeting, saving, spending, and investing. Financial literacy means changing your behavior. Change your money mindset to use your money purposefully. It makes you tell where to spend your money instead of being clueless of where it went.
For corporate employees, this month is also very crucial. So, how can you utilize this month well? How do you achieve financial health? Here are 12 advices for you.
- Prepare a budget
- Know your DTI
- Set goals
- Pay off debts
- Maintain credit report
- Save money
- Calculate daily spending
- Cost saving strategies
- Emergency funds
- Multiple income sources
- Financial audits
- Save for retirement
Let’s learn some of them in details.
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Prepare a budget
Budget is the starting point for all your other life goals. Knowing where your money is going each month makes it much easier to move forward. Make a list of your debts and estimate your income. Rethink your budgeting strategy. Consider how much you pay each month for modest items such as subscriptions to books, software, and Internet services. Decide what you really need and what you can live without.
Know your DTI
DTI, or debt-to-income ratio, is defined as the total amount of monthly financial obligations or debts you have, divided by your household income. This includes your rent and any outstanding debts such as education and mortgages. Create a budget that covers your monthly expenses. Print and review your most recent bank and credit card statements. Consider expenses that don’t happen every month, for example – Amazon Prime or Netflix subscriptions. There is secret money that you spend, even if it is only once a year.
Pay off debts
People usually use two techniques to settle their debts. The first step is to prioritize paying off the debt with the smallest amount first. Make sure you make the debt payments or EMIs for all liabilities. Once you’ve paid off the balance, make a payment to the card with the next lowest balance and repeat the process until all obligations are met. This strategy can be quite rewarding as you will see results quickly.
Another popular strategy is to prioritize paying off the loan with the highest interest rate. This strategy will save you the most money in interest in the long run. Whatever strategy you choose, be patient and persistent.
Maintain credit report
Credit is an important part of your financial picture. It symbolizes your reliability and loyalty as a borrower and how successfully or unsuccessfully you manage your debts and personal finances.
Maintaining a good credit report is important for several reasons. A credit report provides a summary of your credit history, including information about your loans and repayment habits. Lenders, landlords and potential employers can check your credit information when deciding whether to give you credit, a rental apartment or a job.
