In case you forgot, April is National Financial Literacy Month. For the entire month, bloggers and financial institutions alike are working together to help bring financial awareness to the masses. There’s never been a better time to learn more about finance given the current economic climate. Between dropping investments, the difficulty in getting loans, and worrying about buying or selling a home, it’s become quite obvious that understanding how to manage money is an important asset.
One of the interesting things that they have been doing over at Financial Literacy Month is to host a guest blogger each day to highlight one of the steps in their 30 steps to financial literacy. I was fortunate enough to have April 14th, which talks about preparing for the unexpected with an emergency fund.
This is actually a topic that’s received a lot of press lately as personal finance guru Suze Orman has changed her tune a bit. Known for her aggressive attack on debt, she’s actually reversed course in recent weeks to suggest that it’s actually more important to focus on building an emergency fund rather than pay off credit cards. Some say it’s a shocking move, but the reasoning makes sense. In this economic climate, the possibility of a job loss or other financial hardship is more likely than ever, so having some money set aside can be the difference between getting through it or financial ruin.
Start Small and Make Saving Automatic
In my financial literacy month piece on emergency funds, I stress two key components that will make the creation of an emergency savings incredibly easy. Start small, and make it happen automatically. We all know that we should have enough money set aside to cover at least a few month’s worth of expenses, but if you’re starting from scratch, the idea of setting aside a few thousand dollars can be daunting. So, don’t let the size needed stop you. It’s important to remember that $100 saved is better than $0. $500 is better than $100, and so on. Each time you make a deposit, you’re a little better off than you were before, so build on that.
One of the most important things is probably making this process automatic. If you had to drive to the bank every week and actually make a deposit, how likely is that to happen for any extended period of time? It might start by missing one deposit, and then another, and before you know it you’ve gone a month without adding anything to your savings account. If you have deposits made automatically, you don’t have to do anything and the money always shows up on time. It doesn’t take long to not even realize the money is gone and after a while you check your statement in amazement at the progress.
Stay Tuned for a New Finance Site
Make sure you check back tomorrow for the launch of a new finance site put together by a speaker and one of our readers. The site is designed to give students the resources they need to learn the ropes of savings, finance, and all things money. On the site, you’ll find answers to your questions about taxes, careers, scholarships, credit cards, living on your own, and more. Not only that, but it will feature a community where you can interact with and share your own money tips with others.
So, look for a guest post and more information about this new site tomorrow. I’ve already poked around with the site a little and think it’s going to be a great resource.
Author: Jeremy Vohwinkle
My name is Jeremy Vohwinkle, and I’ve spent a number of years working in the finance industry providing financial advice to regular investors and those participating in employer-sponsored retirement plans.
Great post, according to me financial literacy is very much essential for kids as well as for youth and saving money for unexpected situation is very essential for all.
I have been following the advice offered this month in light of Financial Literacy month and it has helped me focus on how to get my stuff in order. I have also been following the tip a day from Sharon Lechter (co-author Rich Dad Poor Dad) who wrote Step 1 on www.financialliteracymonth.com. Her tips are great too-
Yeah, people often forget that saving even the smalles ammounts of money each week/month is better than not saving at all. Too bad banks don't inform people about that too often.