Financial Literacy Month is a celebration and a challenge. It’s a chance to reflect on the state of our personal finances and an opportunity to improve those finances, one step at a time. The 8 steps of Financial Literacy Month are designed to help you identify your money weaknesses and turn them into strengths.
STEP 1: ASSESS YOUR FINANCES: How are you doing financially? What are your strengths? What are your areas of improvement? This is a great opportunity to be honest about your relationship with money. Write down your feelings and findings.
STEP 2: GET COPIES OF YOUR CREDIT REPORTS: Your credit reports can provide a snapshot of your overall financial situation. Reviewing your credit reports for accuracy can also help you to identify errors or fraudulent activity. Fortunately, it is easier than ever to obtain copies of your reports. The FACT Act gives every consumer the right to a free credit report every year from each of the three major credit bureaus: Equifax, Experian and TransUnion. To get your free report, simply visit annualcreditreport.com.
STEP 3: CLEAN UP YOUR CREDIT REPORT: If you find an error on your credit reports, you need to know your rights. Your most effective weapon in dealing with the credit bureaus is the Fair Credit Reporting Act (FCRA). Legally, the FCRA protects you by requiring credit bureaus to furnish, correct, and complete information to companies requesting credit histories for evaluation.
STEP 4: REVIEW YOUR DEBT SITUATION: Freedom from debt is an achievable goal for every family. The first step in regaining control is to take an honest look at your existing obligations.
STEP 5: PAY DOWN YOUR DEBT: There are two popular methods that people use to tackle debt.
The first is to concentrate on paying off the debt with the smallest balance first (never forgetting to make required payments to all debts, of course). After that balance is repaid, you can then apply that payment to the card with the next smallest balance and continue the process until all debts are satisfied. This method can be very rewarding because you see progress quickly. The second popular method is to first concentrate on repaying the debt with the highest interest rate. This method will save you the most in interest charges over time. Regardless of the method you choose, be patient and persistent.
STEP 6: EXPECT THE UNEXPECTED: Unfortunately, bad things sometimes happen to good people. In fact, bankruptcy filers often site an “unforeseen” event as the cause of their financial demise. In addition to long-term savings, financial experts agree that consumers should aim to have three to six months living expenses saved for emergencies. By learning to expect the unexpected, you can keep a minor financial setback from turning into a major financial crisis.
STEP 7: UNDERSTAND THE COST OF CREDIT: It is important to carefully weigh your options before making a credit decision. When you sign or cosign an application for credit, you are agreeing to all its terms. Moving forward, commit to understand everything to which you are agreeing.
STEP 8: KEEP MOVING FORWARD: Congratulations! You have given a great deal of thought to your financial situation, your spending habits, and the change process. You now have the knowledge necessary to make positive decisions that will ensure a successful financial future.