Financial Fitness: Staying on Track

FINANCIAL 1234 Finess STAYING ON TRACK There are many reasons why people have trouble sticking to a budget: They give in too easily to impulse, they're consumed by debt, or sometimes they don't have a steady income. Whatever the reason, many Americans need help keeping track of their finances and spending within their means. Here are some tips on how to become and stay financially fit. FINANCIAL LITERACY IN THE U.S. The state of financial literacy in this country isn't too encouraging. The situation is definitely exacerbated by the amount of consumer debt most people hold. Let's take a look at the numbers. LESS THAN1 IN 3 NEARLY 1 IN 5 Americans who reported they spend more than they make Americans who put together a monthly budget 5 40% Only of people say they have a “rainy-day fund," or three months' worth of expenses saved up.' In a national financial capability study done by FINRA (the Financial Industry Regulatory Authority), participants were given five questions regarding personal finance and economics used in everyday life. ??? 61% were unable to answer more than three questions correctly.' 3 OUT OF 4 Number of Americans who say they aren't saving enough 2 10% Percentage of American adults with a mortgage who've been late or missed a mortgage payment ? 7% Percentage of adults who've reported getting collection calls or considering bankruptcy ? $241 billion Increase in household debt just in the last quarter of 2013 3 HOW DO WE COMPARE? FINRA also did a study regarding the financial literacy of American citizens compared to people around the world. 4 If you have $100 in a savings account and the interest rate is 2% per year, how much will be in the account after 5 years? More than $102 b) Less than $102 c)NExactly $102 a) 2$ If the interest rate in your savings account is 1% per year and inflation is 2% per year, how much will you be able to buy with the money in your account after 1 year? b) 'as today Less than today More than The same today True or false: 003 Buying a single company's stock usually provides a safer return than a stock mutual fund. a) True b) False Who did the best? Here's a look at how respondents performed, by their country of residence: 53% Germany Netherlands 45% USA 30% Japan 27% Here are the answers: How did you do? 1: a 2: c 3: b FIXING YOUR FINANCES Even if you feel like you're falling behind thanks to unmanageable debt, or maybe if you just need some more organizational skills, there are many ways to get you back on track with your finances. Here are nine tips for keeping you from being another statistic among the financially illiterate masses. In Out Get familiar with your earnings and spending. Know how much of what comes in goes out. This includes keeping receipts and tracking any payments of debt you make each Don't impulse buy. If you want something big. save up for it. If you want something small, calculate whether you can really afford it. Don't be swayed by sales. Do some loan/debt calculations. If you do the math and find that it will take 40 years to pay off your credit card debt, then you might want to reconsider how much you're paying each month and pay more than the minimum. month. May Create a monthly budget. Don't just keep track of how much you owe in debts each month. Write down everything you pay each month in bills, how much you want to spend in activities, and how much you want to save. Also Keep track of your pay stubs to make sure you're maintaining the same income each month. Learn about good debt and bad debt. Do not live outside your means. If you can't afford to pay for it with cash, consider Not all debt is created equal. Having a mortgage is not the same as having thousands of dollars of credit card debt. Knowing this may keep you from debt that will cause unnecessary stress. whether it's something you truly can't live without. Find cheaper ways to do the things you want. Cook meals instead of going out; watch movies at home instead of seeing them in the theater. If you get more one month because of a bonus, adjust your budget. 8. GOOD Look for support. There are many communities on the internet Get educated. Discuss your finances. If you live with a spouse or significant other, talk about your finances openly and honestly. You don't Local universities offer or even in your local neighborhood that offer financial advice and help. But remember to sort out financial literacy courses, sometimes entirely online. If you feel you would benefit from a basic course have to drill each other in finance or economics, don't be afraid to sign up. about where each dollar is going, but staying on the same financial path will benefit you both. the valuable information from the unreliable. Trust a government-run site over a personal blog. FINANCIAL LITERACY SOURCES 1. http://www.usfinancialcapability.org 2. http://www.financialeducatorscouncil.org 3. http://www.nytimes.com 4. http://www.finrafoundation.org 5. http://www.dailyfinance.com intuit Quicken