10 ways to improve your financial awareness

People often avoid talking about money, but a lot of people have a million questions about what to do with it.

The discount rate has been around since over 40 years for this exact reason – we want to be a source of reliable and accessible financial information, so that you can feel empowered throughout your financial journey.

So, as we celebrate financial awareness here at Bankrate every day, August 14 is the official day to celebrate this important topic nationwide.

To celebrate Financial Awareness Day, here are 10 things to get you talking and thinking about your money.

1. Start small

If you’re already on a tight budget, saving everything can seem impossible. However, while it saves a few dollars every now and then, it counts as progress and can help build a habit of saving.

“Breaking down big tasks into smaller tasks makes financial goals much more achievable.” says Mary Wisniewski, Banking editor and financial technology journalist at Bankrate. “Today there are a number of mobile apps that can help you too, including Digit, Dobot and Qapital. “

To learn more about the habit of saving, check out these tips.

2. Fund your emergency savings

The basis of a strong financial plan is establishing and maintaining a emergency fund. This designated savings account can be a lifeline when unforeseen expenses arise, which unfortunately will happen at some point. By preparing for the unexpected, you put yourself in a much better and less stressful situation.

For advice on how to start (and create) an emergency fund, check out this helpful guide.

3. Open a high yield savings account

You’ve probably heard it before, but we’ll say it again: Make your money work for you.

One of the easiest and least risky ways to do this is to open a high yield savings account. These accounts basically pay you to store your money. The longer your money stays, the more it grows. This method does not require any major effort on your part, just regular contributions so that your money can continue to grow.

If you are looking for a new savings account, use Bankrate to compare the best interest-bearing savings accounts.

4. Reassess your budget

A lot has changed in the last year due to the coronavirus pandemic, and there’s a good chance it impacted your budget in some way. If you haven’t reviewed your budget yet, now might be the time.

Whenever you are going through a major change in your life, you should revisit your budget as it will likely have to adjust to your new lifestyle.

In today’s world, that can mean working from home, which can mean spending less on transportation and more on food – this needs to be reflected in your budget. The same is true if you are one of the millions of Americans who have recently found themselves unemployed.

Keeping your budget up to date and adapting it to your current situation is essential to your financial success.

For tips on how to create a budget, check out this helpful guide.

5. Evaluate your investments (or get started)

If you are new to investing, one of the most important things you should know is that a diversified portfolio it’s essential.

Don’t put all your eggs in one basket; instead, spread your money over various stocks to reduce your risk.

A good starting point is a S&P 500 Index Fund, which offers stakes in the 500 largest American companies. Yes, it can be volatile and lose value; however, on average, investors earn 10% over time or a cash dividend of around 2% per year.

To learn more about how to start investing, check out this helpful guide.

6. Plan for retirement

Retirement may seem light years away when you’re young, but it will come over you sooner than you think. You want to be financially prepared for when that day arrives.

There are several ways to retirement plan, but some of the more popular plans include:

  • 401 (k): These retirement plans are offered by employers and are generally matched. Make sure to maximize the match to get the most out of it.
  • Traditional IRA: A traditional IRA allows you to contribute pre-tax dollars, which means the contributions are not taxable income. These contributions grow tax-free until the account holder withdraws them upon retirement.
  • Roth IRA: A Roth IRA is similar to a traditional IRA; The main difference, however, is that contributions are made with after-tax money, which means that you have already paid taxes on the money and will not have to pay anything when you withdraw it for your retirement.

Bottom Line: Make retirement planning a priority now, so you can take advantage when the time comes.

7. Take stock of your debts

Coming up with a plan to tackle your debt shouldn’t be something you procrastinate.

Depending on the type of debt you have, there are a few things you will want to consider. For example, if you have more than one student loan, then refinancing may be an option to consider.

In general, there are three types of repayment strategies to consider:

  • The Debt Snowball: An approach where you gradually pay off your debts from the smallest amount to the largest. This method is encouraging because you can see the progress you are making earlier.
  • Debt avalanche: This method is similar to snowballing, but rather orders debt by interest rate. You’ll prioritize paying off the debt with the highest annual percentage rate (APR) before moving on to the next one, and so on.
  • Debt Consolidation: If you have various debts to pay off and are struggling to keep up with them, you might consider debt consolidation. This method consolidates your debts into one loan with a single interest rate.

Bottom Line: Having a plan will help you breathe a little easier knowing you’ve taken the first step to paying off your debt.

8. Write down your financial goals

If you’re thinking about your finances and don’t have a specific goal in mind, it’s a good sign that you should sit down and figure out what those goals are. By setting a goal, you can develop a more precise savings strategy.

Some common financial goals to consider:

  • Retirement
  • Emergency savings
  • University
  • A mortgage
  • Vacation

Your goals are likely to range from short term to long term, each typically requiring another savings strategy if you want to be an efficient saver.

9. Digitize your finances

One of the easiest ways to track your finances is to digitize them. Apps like Mint make it easy to keep track of everything in one place and hence make it much easier to create a budget with everything in mind.

You can also configure these apps to alert you when you are approaching your budget for a certain category or when you have an upcoming bill.

10. Follow Bankrate to stay on top of your game

Make sure to follow @bankrate on social media to stay informed and educated. You can find us on Twitter, Instagram and Facebook.

“My first role at Bankrate was on the copy desk, so it was my job to read all of the content we published,” says Lance Davis, editorial director at Bankrate. “I learned so much from this, and it rightfully changed my financial trajectory.”

Bankrate also offers a free personalized dashboard which is designed to help guide and strengthen your financial journey. The dashboard is tailored to your financial goals and interests, so it has everything you want and need in one convenient place. You can also subscribe to our various newsletters to keep up to date with the latest trends in your inbox.

About Cheryl Viola

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