No matter what we do for work, school, play etc, it’s hard to make it through life without handling money in some capacity. In this time of chaos and uncertainty, it is more important than ever to focus on financial literacy. Everyone has a different definition of financial independence, but there are three things that are useful to know in your journey toward financial success.
Pay yourself first
Paying yourself first is a useful way to think about saving money. You are your most important creditor. If you start working on contributing to an emergency fund, a retirement account, insurance, and paying off debt sooner rather than later, you will be better off financially in the long run.
Creative ways to save
There are so many ways to creatively save. Starting small with a realistic goal is great, but know that saving is a step-by-step process where you decide the steps. You can also open an account with different goals in mind, depending on what you are saving for. Other helpful tools include automating your savings, saving your change at the end of the day, and avoiding or limiting debt for short-term purchases.
Debit vs. credit
It is always important to reiterate the difference between debit and credit, since these two can have very different implications or even repercussions. When you use your debit card, it is linked to a bank account, and the money is withdrawn from the account after the transaction. If you surpass the amount in the bank account and overdraw the account, there are fees charged. On the other hand, using a credit card means borrowing money through a line of credit that is linked to either a bank or a financial institution. The institution that issued the card pays the merchant, and then you have acquired debt to the credit card issuer. While credit is an incredibly easy and convenient way to borrow money, it is just as easy to accumulate debt if you do not pay off the balance in full each month.
These are just three tips to save money and set you on the path toward financial independence. Just one small step toward saving is a step in the right direction.
About Morgan Franklin Fellowship Foundation
Morgan Franklin Fellowship is a nonprofit foundation. Our mission is to teach financial literacy with the goal of inspiring current and future generations to improve the financial well-being for themselves, their families and their communities. Learn more here.
Emily Goulet is Director of Communication for Morgan Franklin Fellowship Foundation