National Financial Literacy Month was spent at home for many this year due to the shelter in place orders in various parts of our country. The COVID-19 pandemic has laid bare the faults in our healthcare system and in our financial planning. Many people are struggling and you may be wondering how all of this ties to financial literacy. This post will shed some light on the topic.
As we come to the end of National Financial Literacy Month 2020, I am working at home during a shelter in place order due to the COVID-19 pandemic. For me, working from home is normal. For my husband, it’s driving him stir crazy because he is used to traveling weekly for work. It’s strange that so many of us now have a lot of time on our hands but we cannot be with friends and family, and for many, they cannot enjoy the time due to financial stress.
This pandemic is to some degree a tale of two economies: many white-collar folks who can work from home, and lots of blue-collar workers that don’t have that option. Many workers, have lost their entire income stream and have no idea when they will be able to work again. The stress is very real.
How this relates to financial literacy may vary depending on one’s income. Many with higher paying jobs are lucky to be earning their wages while sheltering in place. Higher wage earners are more likely to have access to savings, investments, and other perks, such as financial advisers, to help see them through the pandemic. Many with lower paying jobs tend to have fewer financial resources and lack the extra support provided to higher wage earners. It’s interesting, both groups still lack financial literacy in varying degrees.
The financial concerns in the two groups are usually around different topics. Many in the higher income category question opportunities to invest, stabilize their current holdings, refinance their debt to a better position, and are concerned about their future retirement income. Conversely, those in the lower income brackets, simply want to keep the lights on, the kids fed, and a roof over their heads. Both positions stem from varying degrees of financial literacy. For those with more, they often assume they can take more risks. For those with less, they fear losing the amount, if any, that they have accumulated.
I recently learned that in the US a new trend has been emerging. Those who earn more are taking on more debt as a ratio of their wealth. According to Bankrate.com, 57% of Americans with a net worth between $100,000 and $199,999 carry credit card debt (versus 42% of all Americans). This is an alarming trend because it indicates a comfort with living beyond one’s means and not sticking to the basics of financial literacy.
Regardless of whether you are a high wage earner, or a low wage earner, the basics are the same. Here are four key steps you can take to build a secure future:
- manage your cash flow,
- keep your debt under control,
- always pay yourself first,
- have a plan!
These are the basic steps to building a secure financial future. Taking advantage of free resources to learn more during National Financial Literacy Month is also a huge step.
With more time at home, use some of it to learn new concepts or brush-up and expand your knowledge base. It’s also a good time to sit down and assess your current situation. If you are feeling overwhelmed, reach out to a fee-only Certified Financial Planner™ and ask for help.
As an independent Certified Financial Planner™, I can help you focus on your finances and start building that more secure future. Contact me and let’s get started. #talktometuesday #getstarted #HowIcanHelpYou #GetHelp #Hireaplanner #vacation #CFPPro #savemoney #FinancialLiteracyMonth #NationalFinancialLiteracyMonth #financialsavvy #financialplan #stressfree #savings #moneyeducation #financialeducation