Let’s roleplay for a minute. Let’s say you walk into your local cosmetic store and take a trip down the hair care aisle. You notice numerous bottles of shampoo.
One particular bottle catches your eye; it claims to boost hair growth and promote thicker and fuller hair. You flip the bottle over and see simple, easy-to-follow directions to help you get the most out of the formula. You purchase this shampoo with high hopes and begin using it, awaiting your glorious results.
If only financial literacy was this straightforward.
If only it was bottled up in a container with clear instructions on how to manage your money and how following each step can transform your relationship with money. Now wouldn’t that be lovely.
Financial Literacy Starts With Knowledge
Unfortunately, it’s not always that simple. However, with planning and intention you can see growth.
Paying attention to your personal finances is just as important as being attentive to your hair. In both cases, it takes knowledge and patience.
It starts with knowledge. When it comes to your hair, you research hair products and hair tips. You may even analyze the ingredients, checking to see if your next shampoo is sulfate-free. That level of inquisitiveness is what your finances deserve.
Make it a routine to sit with the numbers. Check your spending for the month. How much money came in? How much went out? Are you spending more than what you are earning?
Having this knowledge is power because you begin to understand your money habits and can start the process of saving.
The Importance Of A Savings
An emergency fund is money that is set aside for life’s unexpected moments such as job loss or unforeseen medical expenses. According to Bankrates’ 2024 Annual Emergency Savings Report, 27% of adults report having no emergency savings.
This is truly alarming, especially with the state of the world today. To be safe, your emergency fund should consist of at least 3-6 months of expenses. This is why it is important to be mindful with your spending habits and calculate your monthly expenses.
After determining your savings goal, start building your emergency fund by contributing to a savings account, specifically a high-yield savings account.
This is where the virtue of patience comes in. In the same way, your hair isn’t going to grow 5 inches overnight, your emergency fund is not going to be funded as rapidly as you want it to be. Don’t get frustrated. Stay focused and be consistent.
Month after month, set aside money that will go into your savings account. If you’re interested in making this a seamless process, consider automation, where a percentage or dollar amount from your paycheck goes directly into your savings account. You’d be surprised how much your savings will grow!
You’ve got this! And remember, learning about your finances doesn’t stop at your emergency fund (just like your hair care routine doesn’t end with shampoo). This is only the beginning of your financial wellness journey.
