National Financial Literacy Month: The financial literacy toolkit
It's critical to have a financial literacy toolkit when planning your finances.
You need first to learn the basic skills like setting smart financial goals. But once you have that ground work, you move onto budgeting, bank accounts, credit, credit cards, investing, insurance and estate planning. That's where a financial literacy toolkit comes in — and we have it all for you here in this article.
April is National Financial Literacy Month in the U.S. As I do every April, I'll spend much of the next few weeks reviewing basic financial concepts. But unlike past years, I'm not going to devote every post in April to this subject. It's important, yes, but spending an entire month on the basics gets tedious.
Here's a list of financial literacy resources to help you add to your financial literacy toolkit.
Get Rich Slowly
This site regularly features articles about basic personal finance skills. Some of the best from the past five years include information on the following topics:
- Setting smart financial goals
- How to get out of debt
- How to track every penny you spend
- How to pay your utility bills
- How I cut my television bill in half
- How to avoid bank overdraft fees
- 11 ways to take control of your finances
- The most important money tip
- Budgeting for non-budgeters
- The budget toolbox: 13 tools for building a better budget
- The balanced money formula
- Pay yourself first
- High interest: How to choose between checking, savings, and CDs
- The best online high-yield savings accounts
- Making the most of your checking account
- How to put your savings on steroids with certificates of deposit
- Current CD rates at online banks
Credit and credit cards
- How to choose a credit card
- Essential credit card skills
- An introduction to credit reports and credit scores
- How and when to cancel a credit card
- The anatomy of a credit score
- Making the most of your checking account
- The extraordinary power of compound returns
- What is a Roth IRA and why should you care?
- How to start a Roth IRA (and where to do it)
- Which investments are best for a Roth IRA?
- An introduction to index funds
- How much does the stock market actually return?
- An introduction to asset allocation
- The Get Rich Slowly guide to Roth IRAs
Insurance and Estate Planning
- How insurance works
- How to save on insurance
- How car insurance works
- Estate planning 101
- Getting started with estate planning
- A brief guide to creating a will
As a general rule, the basics category here at Get Rich Slowly contains information about fundamental financial literacy.
But there's more to financial literacy than just learning the nuts and bolts. There's a lot of mental and philosophical stuff that can help you take control of your finances. To learn more about these aspects of money management, browse through the fourteen tenets of my financial philosophy:
- Tenet #1: Money is more about mind than it is about math
- Tenet #2: The road to wealth is paved with goals
- Tenet #3: To build wealth, you must spend less than you earn
- Tenet #4: Pay yourself first
- Tenet #5: Small amounts matter
- Tenet #6: Large amounts matter, too
- Tenet #7: Do what works for you
- Tenet #8: Slow and steady wins the race
- Tenet #9: The perfect is the enemy of the good
- Tenet #10: Failure is okay
- Tenet #11: Financial balance lets you enjoy tomorrow and today
- Tenet #12: Nobody cares more about your money than you do
- Tenet #13: Action beats inaction
- Tenet #14: It's more important to be happy than to be rich
Saving and Investing
In April 2007, I shared a series of videos from author Michael Fischer. Though designed as companions to his book, Saving and Investing, these short pieces stand on their own. Look past the fact that these aren't polished and professional — Michael provides some excellent information. Here are links to each part in the series:
- The power of compounding
- Providers and users of capital
- The difference between debt and equity
- What is leverage?
- An introduction to financial statements
- Why do financial markets exist?
- What is a bond?
- What is a stock?
- What is a stock market index?
- The importance of diversification (also an introduction to diversification)
- What is a mutual fund?
- Types of mutual funds
- The difference between active and passive management
- An introduction to dollar-cost averaging
- The impact of time
- The three enemies of growth
- Coping with high-interest debt
- Getting started
- 5 popular misconceptions about money
Other Web Sites
There are other excellent financial literacy resources around the web.
- CNNMoney has an outstanding overview of basic personal finance topics called Money 101. Each of the 23 topics includes several pages of information, and many of the subjects include an interactive calculator or tool.
- The Federal government has a website called MyMoney.gov, which is “dedicated to teaching all Americans the basics about financial education.”
- The Federal government also provides the Federal Citizen Information Center, which offers free (or cheap) publications on a variety of topics including personal finance. Many of these publications are available in free PDF versions.
- Both Illinois and Wisconsin have sites devoted to personal finance education. These two pages contain a wealth of links to information on many subjects.
- 360 Degrees of Financial Literacy is a site from the American institute of CPAs. It includes many articles on various life stages such as “college,” “couples & marriage,” “home ownership,” etc. A clunky interface, but a lot of solid information.
- Ramit at I Will Teach You to Be Rich has The world's easiest guide to understanding retirement accounts.
- Rhetorical Device offers A brief history of money. This is actual history. It's a short article, but fascinating.
Between the Saving and Investing video series, the GRS basics archive, and the other sites I've linked here, you have a wealth of personal finance material at your disposal. I look forward to writing more about financial literacy in the years ahead.