Why Financial Literacy Month Matters

The U.S. government declared April Financial Literacy Month to help people of all ages build better money habits. Whether you're struggling to make ends meet, or have some money to play with, now is a wonderful time to think about how you manage your money. 

Financial Literacy helps with basic questions — how much money do you have in real life and how can you get more. It teaches you about budgeting, saving, credit, loans, debt, insurance, investing, and taxes. This is important because knowing how money works helps you avoid mistakes, take on less debt, and avoid scammers. 

When you understand money, you can make smarter choices. If you know how much and when to spend you can budget for essentials and the unexpected. You can save for big goals and even enjoy life with things like vacations. You can also build credit, buy a house, and plan for the future. Understanding taxes and insurance are also part of financial literacy. 

As you begin to learn about money you want to focus on budgeting. Get to know the 50-30-20 rule and see how close you can come to spending only half of your income on set expenses. Try to spend no more than 80% of your paycheck and save the rest for future fun or unexpected problems. Learning about banking, borrowing and credit includes reading the fine print before you buy something or sign up for a subscription or choose a bank account. Before you borrow money learn about paying the money back quickly and how to avoid fees. 

Next, consider learning about investing. There are many types of financial products, for example real estate or stocks. Learn both what these investments are and the risk each one carries before you invest your money. Finally, no working person is too young to begin to plan for retirement. The earlier you start investing in a long-term plan the less money you need to invest at a time to build enough to stop working and keep your lifestyle.  

Financial literacy is not only for adults. Help your children understand money too. Model ways to resist impulse shopping. Teach your children the difference between need and want. Help them to save for the bigger things they want. If possible, give your children a small amount of money that is their own so they can learn how money works for themselves. As your children become teenagers help them get their own bank accounts.  

Boston Public Library has many books on financial education. See a list of booklists on working with money which librarians created. Along with books, Boston Public Library offers programs where financial experts share their knowledge. Programs on financial empowerment are happening in April, and every other month, both virtually and in person in every neighborhood of the city.