The Most Important Part of Financial Literacy

Disclaimer

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Most Important

The easiest and most important part of financial literacy is understanding how, when, and what to save. This may sound simple enough and might go in one ear and out the other. I beg of you, please don’t let this part go over your head. You have to over stand this part. Thinking of saving as the gasoline to your car you need to be driven around, getting you to your destination safe and sound. You can have the most expensive car with all the bells and whistles. Wash it every day, keep it waxed, spit shine the tires. Without gasoline for your car to drive, your car will sit and rot.

The How

Now the how part of saving. To try and get a full understanding of this let’s use some nice round numbers. This will make everything easier to keep up with without a calculator. We’ll have a budget of $500 pre week giving us 2000 a month. You’ll have to budget all your bills, food, and rent with this $2000 a month. Hopefully, you don’t have any kids, or this will be really difficult. If you do it’s still not impossible. That might even be better because, you’ll have a two-income household. Just so we keep it simple we’ll stick with the one income. The goal will be to save $500 of our monthly income. Over a year that’s $6000. In just five years we would have saved $30,000.

The When

The when part. Now, we could take $125 out of every paycheck pre week. On the other hand, if we’re getting paid bi-weekly, we’re saving $250 pre paycheck. Now we could take this money and put it under our mattress which isn’t bad at all it keeps us on point with our savings goal. At the end of five years, we’ll have $30’000. However, we can take that same goal of 500 a month and put it to work.

Make It Work

When I say make our money work for us, I mean just that. This is what part. I know right now you’re like, what!? We are not putting this money under the mattress where it can be found or stolen. Burned up in a house. We’re getting a bank account my friends and starting a savings account. This is going to make saving a lot easier. We can arrange it so that when we get paid, the money we want to save goes right to our savings account. Out of mind out of sight. The whole time the money is sitting in the savings account it will be earning interest!

Summary

This is why saving is the starting point and the most important part of financial literacy. Honestly, the saying it takes money to make money is true. Some people will say they have a way to make money with no money needed. Let’s just say I never seen a bum well off. You wouldn’t listen to a bum for money advice. Even if the advice sounds factual, you might second guess it. Start saving if you don’t want to be living check to check.