April is Financial Literacy Month! Financial Literacy Month was created by the National Endowment for Financial Education (NEFE) to raise awareness as to the importance of financial literacy and creating and utilizing smart money utilization and management habits.1
If you are a current client of Fragasso Financial Advisors, you no doubt possess some degree of financial literacy. Learning about financial literacy usually starts when we are young. We were most likely guided by a parent, usually in the form of an allowance given when a household task is completed. This can spur additional conversations about saving, delaying gratification, and earning interest on saved money (when age appropriate).
As of 2023, only eighteen states require personal finance education in schools.2 So, if a child isn’t learning about personal finance at home, chances are they aren’t learning it at all. Personal finance encompasses a broad range of topics – everything from banking to budgeting to building credit to taxes. Focusing on being a good decision-maker and information gatherer is key to making good decisions in all aspects of life, not just financial ones. Personal finance provides an opportunity for life-long learning on topics that impact our daily life and the lives of our family. Being able to set goals, take appropriate action, and be accountable for the results are key principles. Using the SMART3 method of goal setting can be helpful.
When setting goals ask, is my goal:
SPECIFIC:
For example, I want to have $500,000 in my retirement plan when I retire.
MEASURABLE:
How much more do I need to save to accomplish this? What rate of return do I need to help me get there?
ACHIEVABLE:
Don’t set yourself up for failure. The goal should not be easy but it shouldn’t be impossible or demoralizing.
RELEVANT:
What is the purpose of this goal? What will achieving it help to accomplish?
TIME BOUND:
How long do I have to get the goal accomplished?
Goals can be moving targets and subject to readjustment. If I don’t hit my retirement plan amount, do I work a bit longer or pare back my lifestyle in retirement? In our modern era, there are more resources than ever to help us and our families develop and strengthen our personal financial knowledge. Everything from books and magazines to podcasts and websites can give us insight into a topic we want to learn more about. The Consumer Financial Protection Bureau website, consumerfinance.gov, has tools and resources on a wide range of topics for folks on all levels of personal finance knowledge. Help yourself, or perhaps help a young person understand these valuable lessons.
1 Department of Higher Education & Workforce Development(dhewd.gov)
2 Kamaron McNair, “18 states require personal finance education in schools-here’s what they’re teaching kids about money” https://www.cnbc.com/2023/04/13/how-personal-finance-is-taught-in-us-schools.html, April 14, 2023
3 Kat Boogerd, “How to write SMART goals” https://www.atlassian.com/blog/teamwork/how-to-write-smart-goals
December 26, 2021
Fragasso and PCS are not tax service entities and that the reader should always consult with a tax professional regarding his/her own individual situation.
