Category: TRIO Financial Literacy

Financial literacy assessment

Hello TRIO fam! Welcome back, and I hope that you are excited about what is ahead.

I know I am. I get excited thinking about how our financial health is getting better as we, together, heal from financial anguish by undertaking the outlined principles in these blogs. If we are to be better stewards, it is vital to assess where we are now and do something about it.

Below there is a quick assessment I want you to take and be serious about it. Gather you a notepad and pen, then answer each question honestly.

How to assess your financial literacy

An easy way to assess your financial literacy is to ask yourself some questions about your own personal finances. 

  1. Do you know how to create a personal budget?
  2. Do you have an emergency fund that covers at least three months of basic living expenses? 
  3. Do you have a plan for retirement?
  4. If you have debt, do you have a plan to pay it off? 
  5. Do you know your credit score and how to improve it?
Daryl Singleton
Daryl Singleton

How to improve your financial literacy right now

  • If you answered no to some (or most!) of the questions above, don’t worry. There are a few concrete things you can do right now to take control of your finances and improve your financial literacy.
  • Create a personal monthly budget. Your budget is the foundation of your financial health, and it’s easy to get started. Learn how to create a personal budget by looking at the previous TRIO blogs on budgeting.
  • Start an emergency fund. Experts recommend setting aside at least three months’ worth of basic living expenses in case of an unexpected financial burden like a layoff or large medical expense. 
  • Plan for retirement. The easiest way to start investing is with a retirement account: a 401(k), a traditional IRA, or a Roth IRA are all great options. We will discuss this in a few up-and-coming TRIO blogs.
  • Decide to get out of debt. If you’re caught in a cycle of debt, planning to pay it off can save you thousands of dollars in interest.
  • Determine your credit score and learn how to improve it. Improving your credit score is another way to save money on interest. Learn how credit scores work in our next TRIO blog.
  • Spending responsibly on rent can help you achieve your financial goals. Remember, this is not a sprint but a marathon as it relates to financial literacy. Take your time and be smart. Let’s Build!

Saving money

Saving money is like building a muscle. I know you are thinking, where is this going? Any trainer can tell you that building muscle does not happen overnight; making anything is not instantaneous. It takes research, planning, proper form, and diligence.

It is the same way with building a savings account. What is your plan? Have you begun budgeting? Are you patient with yourself? Creating a savings account is not an easy task at first. We all know that it’s essential to save money, but it can be hard to spend less than you earn without specific goals to work toward. Your situation should warrant you to set some goals. In my research, there were common reasons to save that were apparent, saving for an emergency fund, retirement, a big purchase, and paying off personal debts.

Setting aside money for an emergency gives you peace of mind and helps to prevent financial setbacks. Experts encourage having three months of basic living expenses in an emergency fund, but remember, every situation is different. You must be willing to save according to what seems to stretch you beyond your limits. Saving can at times feel like a sacrifice because it is. Living in a society that thrives on instant gratification can rob you of the joy that comes after persevering. That leads to the next phase of saving.

Daryl Singleton
Daryl Singleton

Additionally, we should aspire to save for retirement. In my studies, most financial experts suggest saving minimally 10% of your take-home pay monthly in a 401(k) or/both an IRA. In a world where one might be living paycheck to paycheck, saving for retirement can be the farthest from your thoughts. However, it is essential to shift our thoughts from only seeing trees to viewing the forest; life is a journey. What will tomorrow look like, and what are you doing today to prepare for longevity?

In conjunction, there is another form of saving where you may be saving for a more significant purchase such as a house, car, or starting a business. Saving is indeed a build-up, and the sooner you begin to put money aside for the purchase, the less you have to contribute all at once.

All in all, saving must become a natural occurrence in your life. As it builds, you begin to enjoy watching it grow. You respect yourself more. You don’t mind the sacrifice because it reassures you of peace of mind. So, I will ask you again, what is the plan? How are you building that saving muscle?  I will leave you with these reminders as the winter semester closes and you go for summer break; first, calculate your total income, then, set a plan for your money to grow by budgeting, and finally, SAVE SAVE SAVE!

Please have a great summer; we will be back in the fall, and as always, let’s Build!

Spending part 3: Budget example using the 50-30-20 rule

Marta’s Budget Plan

Marta is a 40-year old woman who works two jobs, one at a grocery store and another as a hostess at a restaurant. She is a single parent.

Marta’s Monthly Income $2,000

NeedsMonthly expenses
Rent$600
Groceries$200
Utilities$100
Car Expenses$200
Car insurance$120
Total$1,220

Disposable Income = Income – Needs: __________________________

WantsMonthly expenses
Coffee$20
Restaurants$50
Entertainment$40
Clothing$100
Total$210

Marta’s Monthly Savings Contribution $100

DebtsMonthly payment
Credit cards$200
Student loans$100
Total$300

Copyright 2018 EVERFI, Inc.

Spending money part 2: Creating a budget

Welcome back to the TRIO Financial Literacy Blog. Currently, we are on the second phase of “spending” related to becoming more financially literate/responsible.

You had homework to complete, did you do it? If not, before reading further, go back and seriously consider ending the task laid out.

By now, you should’ve looked at your finances and have a monetary objective for your money. What habits or trends have you discovered about yourself? Where is your money going? If you are unsure or you can’t see anything good, that is ok. You are here to shed light on the issue that needs a remedy.

Daryl Singleton
Daryl Singleton

The best remedy for financial literacy is budgeting! If you are like me, budgeting is scary. It sounds like a prison for money. However, that is flawed thinking. Budgeting is the key to financial wholeness. In researching, I came across tons and tons of budgeting plans and tips. In the previous blog, we mentioned having financial goals, and this is where budgeting comes into play. It is all about working backward, seeing the end goal first, and working your way toward it from where you are. It takes sacrifice and dedication, but there is gratification in your delay if you trust the process. When you create a personal budget, you are sorting your expenses into categories to make sense of your habits to meet your set goals.

During my research, I came across a budgeting tip that is the easiest and has impressive results. It is called the 50-30-20 Rule. Here is how it works; No more than 50% of income on needs, no more than 30% of income on wants and at least 20% of income on savings or debt repayment. This budgeting model is universal and maintained by many.

Take a few days, look at your income, and follow this rule to develop a budget. In the following weeks, we will look even closer at budgeting tips and tricks to best. Let’s build!