Improve Your Financial Literacy

Do you wish you had more control over your financial situation? The good news is that you don’t need to read a textbook to improve your financial literacy. In fact, according to the Pennsylvania Institute of Certified Public Accountants (PICPA), there are a few simple steps you can take to begin getting your financial house in order. 



Make a Plan
Put together a regular household budget that details how much money comes in each month and what you spend on necessities and discretionary items. This will make it easier to avoid spending more than you earn or running up more debt that you can manage. It can also identify areas where you may need to cut back. The budget serves as a blueprint for achieving your financial goals. If you’re not sure how to get started, your local CPA can offer some tips. 


Start Saving Now
If you’re not already a regular saver, use your budget to determine how much you can set aside each month for savings and retirement accounts. Whether it’s for a long-term goal ss (buying a house, sending children to college, or retirement) or for a near-term expenditures (summer vacation, a household renovation or purchase, or even a new set of golf clubs)saving sooner rather than later allows you to build up more interest along the way. By getting in the savings habit now, you’ll be pleasantly surprised by the many options you’ll have open to you down the road. 


Get a Handle on Debt
The average credit card debt for households with credit cards is around $16,000 according to the Federal Reserve. Not only are those households facing years of monthly payments on that debt, but they will also be paying hundreds or thousands of dollars of interest on their balances over time. If your budget includes more debt than it should, there are steps you can take to pay it down. Instead of focusing on the minimum balance each month, think about the maximum you can realistically pay. Figure out which charge account carry the highest interest rate, and pay off that balance first. Many people would jump at the chance to earn 10 percent to 15 percent on an investment. If you pay off high-interest-rate credit cards that charge those rates, you will be putting that much money in your pocket. If possible, transfer outstanding balances to lower-interest-rate accounts. To prevent outstanding balances from growing, leave your credit cards at home when you shop. Buy only what you can afford with cash. 


Seek Opportunities to Pay Less
Clip coupons and look for sales whenever possible. If you haven’t already done so, familiarize yourself with online sites that offer coupons for many popular retailers or feature group shopping deals. Although your savings on each item may be small, you’ll find yourself with more money in your bank account at the end of each month.


Expand Your Knowledge
The CPA profession’s 360 Degrees of Financial Literacy program features a wealth of information on the challenges that consumers face. The site is organized to provide advice to people in various life stages and situations, including tweens and teens; college students; workers; small-business owners; those serving in the military; homeowners; couples; parents and children; people in crisis; and retirees. The site helps educate users about the issues they’re facing and provides calculators and other practical tools you can use to better understand your needs and options. Visit www.360financialliteracy.org.


Consult Your Local CPA
If you have more questions about these recommendations or would like to gain a deeper understanding of your financial situation, your local CPA can help. Turn to him or her for practical advice on all your financial questions. To find a CPA in Pennsylvania by location or area of expertise visit www.IneedaCPA.org.