Are You Financially Literate? – Tips & Resources for Education on Money (2024)

Being financially literate means having the knowledge and skills necessary to effectively manage your personal finances and achieve complete financial self-sufficiency.

Financially literate consumers are equipped to make informed financial decisions about a host of money-related matters, such as banking, budgeting, using and managing credit and debt, and saving for financial goals.

If you feel like an incomplete understanding of basic personal finance concepts cost you last year, you’re not alone. In a study by the National Financial Educators Council, the average self-reported cost of deficient personal finance knowledge in 2020 was $1,634. That’s about 2% of the 2020 median household income.

But financial literacy isn’t rocket science. With effort, you can overcome whatever knowledge gaps you face today and cease leaving money on the table.

How to Increase Your Financial Literacy

No one is born with expert-level financial literacy, and no one achieves it overnight. But that’s not to say becoming financially self-sufficient requires years of intensive study — far from it. Here’s what you can do right now to boost your financial know-how.

1. Money Management

From covering your expenses to where you keep your money, learn how to handle your finances on a daily basis.

Budgeting

Make the most of your money by learning how to budget it wisely.

12 Steps for How to Make a Budget — Personal Budgeting Tips for First-Timers. Budgeting doesn’t have to be intimidating. Follow this step-by-step guide to craft a sustainable household budget.
. Here are the most common budget categories — and how to bridge the gap between your current spending and ideal target budget.
4 Budgeting Alternatives to Meet Your Financial Goals. Traditional budgeting doesn’t always work. Learn how to apply these four alternatives to your financial situation.
How Zero-Based Budgeting Can Help You Better Manage Your Finances. This simple method can help you make the most of each dollar to align your income with your expenses.
. This old-school cash-based budgeting method has long been a viable alternative to traditional banking.
Understanding Why Budgets Fail — 8 Steps to Fix a Broken Budget. Learn how to shore up a budget that’s not working for you.
How to Stop Living Paycheck to Paycheck. It’s time to stop living hand to mouth.

Banking & Alternatives

Explore banking and legitimate alternatives to manage your money.

Managing Money With Your Partner

Things like budgeting and saving become more complex with two people. Here’s how to navigate household finances with your partner or spouse.

Should Married Couples Combine Their Finances or Keep Money Separate? It’s an age-old question: Should you merge finances after marriage or keep your money separate? That answer is: It depends.
18 Money Management Tips for Newly Married Couples. Avoid financial growing pains with these 18 tried-and-true tips for newlyweds.
. You won’t agree on everything with your spouse, but these principles will help you find common financial ground and work as a team.
. How many of these money arguments have you had with your spouse or partner?
What Is a Prenuptial Agreement? — Do You Need One Before Marriage? Prenups aren’t just for the rich and famous. Here’s why you might need one.
What Is a Cohabitation Agreement? — Why You Need One Before Living Together. You’ve heard of prenups for married couples, but how do you handle things with a long-term romantic partner? With a cohabitation agreement.

2. Saving Money

From short- and long-term savings to living frugally, these reads will help you stay on budget and meet your financial goals.

Savings

Want to put aside more money for the future? Save up for a vacation or emergency expenses? These pieces will help.

. Every working-age adult should have these three types of savings.
. An emergency fund is designed to cover a financial shortfall when an unexpected expense crops up. Here’s how to create yours.
How to Maximize Your Savings Rate — 12 Tips to Save More Money. Get serious about preparing for your future and building wealth with these tips to boost your savings.
27 Ways to Trick Yourself Into Saving More Money. Stop relying on discipline to save. Instead, try these ways to trick yourself into saving more money.
. Not all overspending stems from addiction. This article outlines steps you can take to quell overspending in all its forms.

Frugal Living

Learn how to make your money go further by spending less.

5 Best Money-Saving Strategies Proven to Work for Anyone. Saving money isn’t rocket science. These tips are simple and easy to follow, no matter your financial situation.
19 Frugal Home Budgeting Tips That Will Save You Money. There’s never been a better time to look at how much you’re spending each month to find ways to cut back and save.
9 Ways to Avoid Lifestyle Inflation — Spending Less When You Earn More. The correlation between higher income and higher spending is real. Learn how to save more as you earn more.
. Learn how taking frugality too far can actually hurt your finances.
How to Avoid Frugal Fatigue by Splurging on These 12 Cheap Luxuries. Even the most disciplined, frugal consumers get tired of pinching pennies. These 12 luxuries make fastidiousness more bearable without seriously impacting your budget.

3. Understanding & Managing Debt

Make the wide and often daunting world of credit and debt less intimidating by reading these pieces.

Debt Basics

Learn what common debt-related terms mean.

. Compound interest directly affects your borrowing costs. Understanding it is essential to true financial literacy.
. The prime rate affects borrowers and the economy in several ways. What is the prime interest rate, how is it set, and why does it matter?
What Is Considered Good Debt vs. Bad Debt? — Differences. Not all debt is the same. Learn the difference between “good” debt and “bad” debt here.

Your Credit Score

Your credit score plays a crucial role in your financial health. Learn how credit scores work and what your score means.

. What makes a good credit score? It depends on whom you’re asking.
. Do you need to pay to check your credit score? The short answer is no — but that’s not the end of the story.
. Learn what common financial errors can negatively impact your credit score and blemish your credit history if left unchecked.
7 Ways a Bad Credit Score Can Negatively Affect You — How to Track Your Credit Score. Why is bad credit bad? We outline seven ways a subprime credit score can get you into trouble and offer some solutions.
How to Build Your Credit History Fast — 8 Ways to Establish a Good Score. If you don’t have a credit history, there are a few actions you can take to build yours up fast.
8 Tips on How to Improve Your Credit Score Rating. Over time, these simple strategies could improve your credit score.
. Use these strategies to recover from a serious credit setback.
How Does Bankruptcy Affect Your Credit Score? Learn what bankruptcy means for your credit score. Spoiler: It’s not good.
. Recovering from bankruptcy is a long road. Start here.

Credit Cards

The credit card is the most common type of unsecured consumer debt. Here’s what you need to know to be a responsible credit card user.

Loans & Mortgages

Dive into the dizzying array of debt products available to financially literate consumers and learn how they work.

. Here’s what you need to know to weigh your options between federal and private student loans.
. Should you apply for an unsecured personal loan rather than a credit card or secured line of credit? We weigh the pros and cons.
. Even when you absolutely need some extra cash to make it through the month, there’s almost always a better way of getting it than turning to a payday loan shark.
6 Tips to Get Approved for a Home Mortgage Loan. Planning to buy a house soon? These strategies could increase your loan approval chances.
Home Equity Loan vs. Line of Credit (HELOC) — Which Is Right for You? Learn more about these two options for tapping into your home’s existing equity.
. FHA mortgage loans offer key benefits for first-time homebuyers with limited capital, but they have some major downsides too.
. If you or a family member have served in the military, you may be eligible for this unique type of mortgage loan.
USDA Home Mortgage Loans for Rural Development — Eligibility Requirements. For qualifying rural homeowners and homebuyers, USDA loans offer fantastic benefits.
. If you have good credit, should you assume the risk of co-signing a loan for someone who might not otherwise qualify?

Paying Down Debt

These articles can help you manage and reduce existing debt loads.

How to Get Out of Credit Card Debt Fast — 5-Step Payoff Plan. If you’re overwhelmed by credit card debt, you need this step-by-step payoff plan.
Best Way to Pay Off Debt — Snowball vs. Avalanche vs. Snowflaking. Learn about three methods of paying down your debt and find out which is best for you.
What Is Credit Counseling? — How Debt Management Plans Work. Credit counseling services offer a new perspective on managing debt and may help you reduce your balances faster. But be on the lookout for predatory lenders.
. Learn when it makes sense to use a personal loan for debt consolidation and when it’s best to pursue other alternatives.
. These tips may help you get a handle on your student loan debt.
Your Options for Paying Back Federal Student Loan Debt. So, you’ve graduated from college or graduate school and — like the vast majority of students — borrowed money to get your degree. Now what?
Consolidating vs. Refinancing Your Student Loans — Which Is Better? Learn about two popular options to lower your monthly student loan payment.
. Before you decide to refinance your mortgage, you need to know more about its upsides and downsides.

4. Financial Planning

Start here for guidance on financial planning and related concepts, such as taxes and goal setting at different stages of life.

Basic Finance Concepts

. Want to know how much you’re worth financially? Here’s how to figure it out.
. What is inflation, what causes it, and what does it mean for you?
. Learn how inflation affects you and how can you plan for it — or even use it to your advantage.
. Deflation is a sign that something is seriously out of whack with the economy. Find out what it means for your finances.
. While you can’t control interest rate fluctuations, you can take steps to reduce their impact on your assets and financial goals.

Setting Financial Goals & Principles

These articles cover the art and science of establishing your financial principles and setting achievable goals.

. How do you determine your financial priorities? How do you achieve them? Welcome to your official cheat sheet.
How to Become Financially Independent Quickly Using the FI Formula. Learn about a simple but accurate calculation that reveals how long it will take you to achieve financial independence.
? The FIRE movement aims to upend the traditional retirement timeline and allow followers to reach financial freedom and retire early. Learn how FIRE works and find out if it’s right for you.

Taxes

. Whatever your tax situation, we’ve got you covered. Learn about tax basics, prepare for completing your return, and understand the various credits and deductions you may be entitled to.

Help With Financial Planning

. Financial professionals don’t all fit the same mold. Learn about seven distinct types and their core functions.
Choosing a Financial Planner vs. an Investment Advisor — What’s the Difference? You might need both, but maybe not at the same time.
. Use this guide to evaluate financial advisor candidates and narrow down your choices.
Why You Should Hire a Certified Financial Planner — Benefits. Learn more about the benefits of using a certified financial planner to realize your long-range financial vision.

5. Protect Your Money

Learn to protect your money, whether from a disaster or financial scam.

Health Insurance

You never know what the future holds. Here’s how to decide how much health insurance coverage you need to protect yourself against the unforeseen.

. Most people have health insurance, but many don’t understand how it works. Here’s your crash course.
3 Reasons Why You Need to Get Health Insurance. Even if you’re young and healthy, there are plenty of reasons buying health insurance is the smart thing to do. Here are the three biggest ones.
How to Choose the Best Health Insurance Plan for Your Family. Choosing the right health insurance coverage can be complicated. Follow these steps to find the right plan for your family.
9 Ways to Get Health Insurance Coverage Without a Job. Whether you’re unemployed, self-employed, or your employer doesn’t offer health benefits, there are several solutions to cover your medical costs.

Life Insurance

Protect your loved ones financially in the event of your death.

How Much Life Insurance Do I Need? — Typical Coverage Amounts. Use this guide to determine whether you need life insurance and how much.
What Is Term vs. Whole Life Insurance? — Types of Life Insurance. Learn the differences between these two types of life insurance and how to find the right policy for you.

Property Insurance

Insure the physical things in your life, from your home to your car.

? Learn the basics about homeowners insurance.
? Learn the basics about renters insurance.
? Learn about what renters insurance covers and how to calculate how much renters insurance coverage you need.
. Before rushing to purchase a policy you don’t need or writing off renters insurance as unnecessary, take a few minutes to consider the benefits and drawbacks.
11 Factors That Affect Car Insurance Rates — How to Lower Your Costs. Knowing what affects your rate can help you make a more informed decision when purchasing car insurance and lower your expenses.
. Regular homeowners insurance policies don’t cover flood damage. If you live in a flood-prone area, that’s a problem.

Other Insurance

Don’t forget these other types of insurance, which you may or may not need depending on your situation.

What Is Umbrella Insurance — Do I Need a Policy? Umbrella insurance could protect you from otherwise ruinous liability claims. Learn how it works and when it makes sense.
. Learn about the benefits, suitability, and cost of disability insurance, which provides financial protection if you become unable to work for an extended period.
. Vet bills can be expensive. Pet health insurance can help, but it’s not for everyone.
. Mortgage protection insurance will cover some or all your monthly mortgage bill in the event you lose your job or become disabled. But do you really need it?
? Travel insurance reduces the financial risk associated with travel nightmares like lost luggage, missed connections, canceled flights, and sudden illness. But is it really necessary?

Avoiding Financial Scams

Financial scams are far too common. Learn how to spot them ahead and seek redress if you’re a victim.

7 Government Imposter Scams to Watch Out For. Some of the savviest financial scams prey on our inherent trust of government employees. Learn how to spot “government” outreach that doesn’t seem quite right.
12 IRS Tax Refund Scams — Common Frauds to Avoid. With billions of dollars in refunds going out, there are bound to be fraudsters trying to take advantage of people. To avoid becoming a victim, know the common types of tax scams.
. Equip yourself to resist offers that seem too good to be true.
. Predatory lending practices come in many forms. These are the most common and how to seek recourse for them.
. Payday lending isn’t an outright scam, but it’s inherently predatory and almost never appropriate, even for unbanked consumers with poor credit.
Work-From-Home Scams — How to Avoid These Fake Job Opportunities. Keep these red flags in mind as you seek legitimate ways to earn income from home.
. Learn how to spot common home loan scams likely to leave you worse off.
12 Elder Fraud Scams That Target Senior Citizens — How to Stay Protected. Protect yourself and your loved ones by knowing these common financial scams that target seniors.
How to File a Complaint With the Consumer Financial Protection Bureau (CFPB). If you suspect you’ve been victimized by an unscrupulous or predatory financial institution, your best course of action may be to file a complaint with the CFPB, a federal agency charged with protecting consumers.

6. Investing

Explore the concepts and principles you must understand to make informed investing decisions.

65 Financial Terms Every Investor Needs to Have in Their Vocabulary (List). Get a crash course in investing lingo with this handy glossary.
. There are many investing vehicles, including some you might not have heard of.
. Certificates of deposit (CDs) are a very low-risk way to invest your money through banks, credit unions, brokers, or lenders. Here’s how they compare with other types of savings and investment vehicles.
Investing in Index Funds vs. Managed Mutual Funds. Mutual funds and index funds have many similarities but also some key differences. See how they compare.
. ETFs are an easy way to gain instant diversification by owning a fund that pools investor’s assets to invest in a variety of securities. Learn everything you need to know about them here.
Investing in Stocks vs. Bonds — Differences to Consider. Stocks and bonds are some of the most widely known investment vehicles on the market today. Learn how they stack up.
Is Stock Diversification Actually Important for Your Investment Portfolio? Is diversification a virtue or a vice? Learn both sides of the debate so you can decide for yourself.
4 Asset Allocation Steps to Build a Balanced Investment Portfolio. A balanced investment portfolio is key to investing success. Create one with these steps.
Active vs. Passive Investing — Which Strategy Is Right for You? You can break most investing strategies down into two categories: active and passive. Explore the pros and cons of each.
Fundamental vs. Technical Analysis — Which Is Better for Investing? Fundamental analysis and technical analysis are two approaches to identifying good investment opportunities. Learn which is best for you.
How to Do Research on a Stock to Buy Before Investing in the Company. A step-by-step guide on how to find the information you need to make educated stock investments.
Why Emotion Is the Enemy of Investing — How to Avoid Herd Psychology. Emotions can get in the way of earning strong returns on your investments. In fact, removing emotion from your investment decisions can increase your returns by up to 23% over 10 years. But to do that, you first have to know what motivates you to make emotional decisions.

Retirement

How Much to Save for Retirement — Planning Strategies for Every Age. How much is enough when it comes to retirement savings? While the answer varies from person to person, some universal rules apply.
. These long-range mistakes are as common as they are avoidable.
6 Best Investments for Retirement Planning. For retirement investors, not all financial instruments are created equal. These six are among the best.
. The traditional 401(k) plan is the most popular workplace retirement plan.
. The Roth 401(k) is an alternative to the traditional 401(k).
. The traditional IRA remains one of the easiest and most popular tax-sheltered accounts.
. Roth IRAs combine flexibility with tax savings. The catch? You don’t see those tax savings until you retire.
Safe Withdrawal Rates for Retirement — Does the 4% Rule Still Apply? How much can you safely withdraw from your retirement accounts? Find out whether the longstanding 4% Rule applies today.
Sequence of Returns Risk — How It Can Make or Break Your Retirement. Learn how to mitigate the risk of a serious market downturn early in your retirement.

7. Estate Planning

The sooner you start thinking about estate planning, the better.

. Think of this as Estate Planning 101 — everything first-timers need to know about the daunting world of estate planning.
. Learn how to express your final wishes in a legally binding document and update that document as your personal circ*mstances change.
. “Trust fund” is often seen as a pejorative term, but guaranteeing income to an entitled kid is far from its only function.
. Learn how a court of law handles your legal and financial matters after your death.
. Are you liable for estate tax? Most Americans aren’t, but other taxes may apply to assets distributed from deceased taxpayers’ estates.
. Learn about the gift tax, which may limit what you’re able to distribute to your heirs before and after your death.

Final Word

It bears repeating: Financial literacy is a journey, not a jaunt. These articles are only a portion of the content we offer on various financial topics.

The best thing you can do for your personal financial literacy is to become a voracious, educated consumer of finance-related content. As you increase your information consumption, use your existing value system, personal circ*mstances, and life goals to inform your opinions and objectives.

Keep reading to become a smarter, more confident consumer.