Hi all,
April rain brings May flowers. However, it hasn't rained as much as it did last year. Most of the plants in my yard were wilted because I was busy with lotus planting and forgot to water them. Will there be a drought this year? A few days ago, there was a Red Flag warning about the chances of wildfire in my area. Strange!
The weather keeps changing unpredictably due to climate change. Farmers may have a year of loss, which may also affect the consumption price and inflation. I'm not a farmer, just an amateur gardener, but I felt the worry about the weather and the crops.
April is also Financial Literacy Month. Do you think we are all literate about our own money?
20% of students lack basic skills of financial literacy skills, which means they may know nothing about budgeting, saving, or managing their own money.
Adults are not better. 29% of working women showed basic skills of financial literacy skills whereas 47% of working men did. This means that around 50% of households are having difficulties managing their hard-earned money.
You may find a lot of complaints from some Social Media Groups like FIRE, which stands for Financial Independence, Retire Early. I remembered reading a Facebook post from a man who wants to retire early. He tries to live frugally and invest aggressively but loves a woman who shops impulsively. He asks if their relationship may end due to the conflicts between how they manage their money.
The ability to distinguish a thing you need and a thing you want before making a purchase can't be built in a day. It may take the efforts of a whole family and a long time for a kid to learn to manage and control their shopping habits. A lot of people earn a lot of money but spend more than that, which leads to credit card debts. And shopping addiction can be a disorder that needs treatment and therapy.
According to National Standards for Adult Financial Education, financial literacy means having the confidence, knowledge, and skills needed to make financial decisions that promote financial self-sufficiency, stability, and well-being. These skills include the ability to effectively locate, evaluate, and use information, resources, and services and to make informed decisions about financial obligations, budgeting, credit, debt, and planning for the future.
To be short, you will need these basic skills: Money management, credit and debt management, risk management, Investing, and retirement planning. They can be considered survival skills that give you a comfortable life with any amount of money you earn.
However, not everyone receives financial education. The 2016 National Financial Capability Study indicated that as of 2015, less than a third of American adults had been offered financial education at a school, college, or workplace. So, they may have habits of managing money as they follow their parents' or grandparents' examples. And as Ric Edelman wrote in his book The Truth About Money, their grandparents may not need to save for retirement because their life expectancy is shorter. They may not need to worry that the increasing healthcare expenses will drain their retirement money.
You may think, "What? I still live well without knowing much anything about financial literacy." I may congratulate you on that. However, there are times you may feel difficulties making financial decisions like buying a car with cash or financing it, letting your kids pay their own student loan, or helping them pay loans with your retirement money. Your decisions today can affect your long-term future which you may not envision today.
Besides, limited English and cultural differences can pose barriers to financial success. Vietnamese immigrants tend to use cash to buy everything. They try to save enough money to buy something because they don't want to have any debt. However, they are losing a lot of opportunity money which can help them build wealth for the future.
Similarly, a friend asked me what she should do with about $30,000 in her savings account? Should she use it to pay the principal of her mortgage? And if she googled her question, the results suggest places she should invest.
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I want to ask her whether she protects her present income yet if she experiences a job loss due to disability or being laid off? I wonder if she has already saved for her retirement yet? What happens if she needs money to repair her car a week after she paid $30,000 into her mortgage principal? Can she get a part of that money back for her car repair? This question will be answered in another full post.
You also may face complex financial decisions like completing legal documents, planning for retirement, purchasing a home, managing debt, assessing job offers, or dealing with issues related to divorce or death of a family member. When you feel frustrated, advice from a professional will help you straighten everything.
In the meantime, you can teach yourself about Money Management via some books and educational websites. I like Consumer.gov, and MoneyFit because they use simple English for us to understand.
I will help you with these financial questions, but please forgive me for my slow speed of posting. Maybe a call to me can help you get the answers more quickly.
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