It’s a shame that financial illiteracy doesn’t hold as much of a stigma as regular illiteracy does. If it did, perhaps there would be fewer financial illiterates out there. You may not think financial literacy is important or relevant today, especially with so many demands on your time – your social media presence is so much more important – and it’s so boring and uncool. And why isn’t there an app for it? Being able to use your smart phone would certainly make it easier, wouldn’t it?
Sorry to burst your bubble, but when it comes down to it, no application does the job. It’s actually going to require some effort on your part.
So where do you begin? Simple. READ YOUR STATEMENTS. I know many people who do not even open their statements, let alone read them. How can you possibly manage your money without reading your statements is beyond me. And there really aren’t any good excuses why you aren’t reading them (unless of course you can’t read, and that’s a whole lot bigger problem).
Store Receipts. Let’s start with the easiest. When you buy something, you should check the receipt and count your change. Last week, I was busy chatting with the clerk at the grocery store and he rang an item in twice. I noticed the bill was more than I expected and went to get my money back. My son was astonished. He never checks his receipts. It’s easy to spot if an item is rung in more times than you have purchased, but what if the item rings in at more than the shelf price? When you point it out, the clerk may offer to reduce the price for you. "Fair’s fair," you think "that’s only reasonable" but did you know that you are actually entitled to that item for free (up to $10.00 and $10.00 off the item if it’s over $10.00). Well you’ll never take advantage of that if you don’t know how much things cost will you?
Pay slip. It astounds me how ignorant people are about their pay. How can you know how much you can spend in a month if you don’t even know how much you are going to get paid? Do you ever read your pay slip and would you know if you are suddenly getting more or less pay? I’m going to do a blog post just on pay slips later, but for now you should be aware of what your pay is and if it changes significantly you should check out why this is so.
Bank Statement, mortgage statements, insurance statements. Do you ever look at your bank statement? In fact do you know how much is in the bank on any given day? If you don’t go over your bank statement you won’t know if someone has stolen your pin and debit card details and is busy spending all your money! Or if your car lease company has taken 4 payments in the month instead of 2!
Credit card statements. Ouch, I can’t look at my VISA statement, it is 2, 3, 4 pages long. HELLO, if your VISA statement is that long, you are putting too much on your credit card. We won’t go into minimum balance payments etc. at this time but save that for a later date.
Investment statements, from bank, broker etc. After the dot com bubble burst and the market tanked, many people who had lost their shirts (and that’s another blog post) couldn’t bear to open their statements and face the reality of their stupidity or cupidity. Been there, done that. It’s time to push on and face the reality and do something about it. Perhaps sell off those ridiculous losers, as they’re only going to make you upset every time you look at them. If you don’t perhaps you will be reminded never to be so stupid again.
So, once you’ve taken these first few steps to financial literacy and gotten into the habit of spending a few minutes looking at your statements when they come in the mail, you’ll become familiarized with what they look like, the kinds of jargon they use, and you’ll be ready to proceed to learning a few other concepts.
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