Financial Literacy Checklist

Home By Geneva >> Financial Literacy Checklist

April is National Financial Capability Month! To celebrate, we wanted to put together a checklist with some essential steps you can take toward financial literacy and security.

Financial Literacy Checklist

1. Income

First things first, it is essential to track and document all forms of income including wages, gifts, allowance, garage sales, any type of income routine or not. It can be helpful to track your financials on a spreadsheet or through an app like mint. There are several free budgeting resources online that are super easy to use and can be very helpful for those on a tight budget.

2. Expenses

This is an important one, and one many don’t like to think about. If money is leaving your account, it’s an expense. This can include living expenses, school expenses, recreation, leisure, and more. Color coding your expenses can help visualize where you’re spending your money and where you may be able to cut back. Consider having 3 categories like ‘essential’, ‘should pay’, and ‘nice to have’ that you can track and compare. And always keep an eye out for more affordable substitutes.

3. Saving

The purpose of saving is often misunderstood. Saving isn’t about putting all of your excess funds into a savings account for a rainy day, it’s building a “backstop”, an emergency fund to protect you from life’s uncertainties. That kind of account should have enough to cover 3-6 months of expenses to keep you afloat should anything unexpected happen.

Never dip into these savings unless it is an emergency. So often people will get into a difficult financial situation trying to pay for a minor expense with their emergency funds and when a real emergency arises, that safety net is no longer there. Once your emergency fund is established, consider putting any additional income to work through investing. Note: If you leave your earnings under your mattress you could actually be losing money through inflation!

4. Credit and Debt

A credit score is a value placed on you as a borrower determining your trustworthiness to pay back a loan based on previous behavior. You need credit and a good credit score to take on debt. Not all debt is a bad thing and small amounts of debt can help you build your credit so you can make bigger purchases in the future. Just be sure to make your payments regularly and on time because a low credit score can really damage your purchasing power. A general rule of thumb is to use between 5% and 30% of your available credit to build your creditworthiness. For a deeper dive, check out these best practices to build your credit.

5. Investments

Investments come in all shapes and sizes and can be paired to all levels of risk tolerance including stocks, bonds, funds, and yes, real estate. It’s important to consult with a financial advisor on the best kinds of investments for your situation. A diverse investment portfolio, education, and investing early are all keys to growing a self-sustaining source of income for your future!

6. Retirement

For 3 out of 5 Americans, retirement is a big financial concern. With many companies moving away from pensions, individuals looking to save for retirement need to consider transitioning to a defined contribution plan like a 401k. A good rule of thumb is to save 10-12 times your expected annual income at the time of retirement. Be sure to account for wage changes, inflation, and lifestyle when calculating how much you think you’ll need. Different people have different ways to save, but a diverse investment portfolio could give you the passive income necessary to support your lifestyle in the long run.

Financial literacy is more a marathon than a sprint. We hope this checklist is a helpful introduction to the wild world of personal finance. Be sure to consult with an expert to see what financial next steps are right for you.

If you’re ready to add real estate to your investments, reach out to a Geneva Financial Loan Officer to see what is possible!

Rachel Caple

Rachel Caple has more than 18 years of experience in mortgage banking industry. Residing in Castle Rock, CO. Rachel spends her spare time with her husband, Sean and 4 boys. She also enjoys traveling, attending hockey games, and playing golf (or attempting to).

Quick Rate Quote

Feel free to contact us if you have any questions or would like a second option on your existing mortgage.