The United States has recognized April as Financial Literacy Month since 2003, and it is a great time to shine a spotlight on the importance of economic and financial education.
For those who struggle with finances and have had the word “bankruptcy” brought up in regard to your situation, your struggles may have started as far back as childhood. According to the Council for Economic Education, research suggests that children begin developing attitudes and behaviors about money as young as six or seven years old. But personal finance is rarely taught in the school setting, and many children, teenagers, and young adults are not equipped with the knowledge they will need in the real world.
Commit to change during Financial Literacy Month
Despite the recognition that economic and financial literacy is critical to succeed in modern society, study after study shows that many Americans continue to lack even a basic understanding of economic and financial concepts. This unfortunately, can lead to having to file for bankruptcy. You absolutely can improve, and it’s never too late to learn.
In celebration and recognition of Financial Literacy Month, here are 10 basic steps you can take now to foster change.
A special note for those who have children — as you go through any of these steps, talk to your kids about it! Teach them as you go, be honest about mistakes you have made, and what you are doing to fix them so that they will be set up for a better financial future when they are adults.
- Step 1: Make a commitment to change. Oftentimes, the first thing you need to do is really examine your attitude about money. Are you ready to accept responsibility for changing your financial situation? Do you believe that you can and will change the way you make financial decisions? Are you ready to make a lifelong commitment for yourself, your family, and your future?
- Step 2: Take a look at where you are now. If things are not going well or if you know you’re in trouble, you need to see what the full picture of the situation is. Stop ignoring bills that are overdue, debt that is piling up, and other areas of your financial life that have been neglected. It can also be a good idea to find out what your credit score is.
- Step 3: Decide who will take ownership. All of the adults in your family should be aware of the overall situation, but it can be helpful to put one person “in charge.” When one person concentrates on daily financial tasks and stays on top of things, they often feel more ownership and have more success.
- Step 4: Identify your priorities. Your number one priority right now may be to avoid having to file for bankruptcy. Basic money management can be a huge part of this. If you are teetering on the edge of concern about bankruptcy, putting these practices in place now, before things get too bad, is a great idea as well. If your financial situation is not too bad, you can focus more on goals related to savings, retirement, and other types of funds.
- Step 5: Set goals. Even if you are focused on avoiding bankruptcy for now, it’s a good idea to set some short, mid, and long-term goals. It’s important to have something to work toward and look forward to for the future. If you have a positive attitude that you can turn things around, it will go a long way in how you approach your finances.
- Step 6: Identify ways to pay down debt. Debt is often a big problem for those who have to file for bankruptcy, so it’s important to commit to tackling this. You may decide to concentrate on paying off the debt with the smallest balance first, while also making required payments to all debts. After the smallest balance is repaid, you can apply that payment amount to the next smallest balance and continue the process for all debt. You may prefer to concentrate on repaying the debt with the highest interest rate first. This will save you the most in interest charges over time. Patience and persistence are key with either approach.
- Step 7: Plan for problems. Another big factor for those who have to file for bankruptcy can be unexpected, emergency situations that come up, such as accidents or illness that involve large medical expenses. Bankruptcy filers often cite “unforeseen” events as the cause of their financial problems. To avoid this, financial experts recommend having three to six months of living expenses saved for emergencies.
- Step 8: Keep a close eye on finances. How much you spend is usually a more important factor than how much your earn. Those dollars going out can add up more quickly than your realize unless you keep a really close eye on your family’s spending. Figure out what works best for you — paper and pencil or spreadsheet on the computer — and record all of your expenses. Doing this daily is a great idea and the easiest way to keep it from becoming an overwhelming task.
- Step 9: Figure out how to reduce spending. With all of your recorded information, analyze where the money is going and identify areas where you can cut back. If you reduce how much you are spending on eating out, be realistic and apply some of that savings to your grocery budget since you will probably need to cook at home more. But there should still be extra savings that you can put directly toward paying off debt or into an emergency fund.
- Step 10: Keep it up. Finding financial health won’t happen overnight, and it probably won’t happen in the first couple of months that you follow the above steps. You need to be patient, persistent, and completely committed to change.
Any time is a good time to start making changes, but during Financial Literacy Month, we challenge anyone who wants to do better to start making changes. There is no time like the present to commit to a healthier financial lifestyle.
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If you are struggling with excessive debt and looking for a sound solution, the attorneys at Tom Bible Law, can help you explore your legal options. We have helped numerous clients from Chattanooga and throughout Tennessee and North Georgia achieve their debt relief goals by guiding them through the bankruptcy process. We work with every client personally, giving each and every bankruptcy case the time and attention it needs. We understand the financial pressures our clients are facing and work to resolve their debt problems in a favorable, cost-effective manner. Our bankruptcy lawyers have more than 50 years combined experience and are here to help. Call us today at (423) 690-7712 or drop us a note here.