by Christopher E. Mediate
Investing in your financial literacy is the best investment you will ever make. Read that again, but slower. For some of you, that might be a tough pill to swallow. After all, learning about money, how it works, and all the terminology attached isn’t the most glamorous thing in the world. I, myself, someone whose parents have owned and operated a financial services firm for over 25 years, didn’t want any part of it for quite some time. HOWEVER, I wish I did care a little more, and that’s what I want to discuss today.
For starters, let’s touch a little bit on what financial literacy is. To be financially literate is to understand financial concepts, along with how these concepts affect your money and how best to manipulate them to ensure the effects they have on your money are generally positive. These financial concepts include credit scores, interest rates, budgeting, insurance, investing, etc.
Now, when I say manipulating these concepts, what I’m really trying to highlight is the ability you gain to make better informed decisions on various financial hurdles you may experience as you progress through life. This investment in your knowledge tends to compound, and the more informed decisions you can make, the more financial stability you will earn. At the end of the day, what we should all strive for is long-term financial security – where we are not constantly stressed, overwhelmed and uncertain about where our money stands.
And, as it stands now, being financially secure has never been more important. We have been getting hit left and right with a variety of financial issues, some of which our parents haven’t even had to deal with. Record-high inflation, geopolitical uncertainty, student loan debt has been through the roof, rising housing costs, rising health insurance costs. And let’s not forget that Americans are not saving NEAR enough for retirement; according to a report by the Federal Reserve, the median retirement savings for adults in the U.S. is only $65,000.
If all that isn’t enough, let me throw some numbers at you. According to a 2022 survey by Credit Donkey, only 32% of U.S. households prepare a monthly budget. Per Bankrate’s 2023 annual emergency savings report, 56% of Americans can’t cover a $1,000 emergency expense with their savings. According to the American Psychological Association, 65% of adults say that money is a significant source of stress for them.
I could go on about the doom and gloom, but instead, allow me to provide you with some benefits. According to a study done by FINRA, individuals who displayed high financial literacy were are more likely to spend less of their income, save for their long-term financial future, and were less likely to be in credit card debt. Interesting…
Still don’t believe me? What about this: according to a report done by the Milken Institute, individuals with low financial literacy spend an average of 12 hours per week dealing with personal finance issues; while individuals with high financial literacy spend just three hours per week. I will let that speak for itself.
Yet, none of what is happening has been enough to justify action. Instead, we are waiting for someone to save us. The reality here is that no one is coming to save you. That’s why financial literacy is important, which is why you should be arming yourself with the knowledge to save yourself, the lifestyle you want, and the retirement you dreamt of. It takes time and effort, but it’s something that compounds each day, even if you start small. You deserve financial security, be the hero in your own story. And there’s no greater time to start that story, than today.
We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.