Having at least a foundation in financial literacy is so
important in the average American’s life because without it one will never have
the chance to experience what wealth and freedom is all about. The recession and the rising amount of
credit card debt that American’s have prompted me to write this article. The urgency of financial education is
paramount because people are feeling hopeless and are becoming slaves to their
credit cards. This is why I will
discuss how a 6-month safety net of cash, investments, and paying off debt can
be a good foundation for changing one’s financial future.
Safety nets with cash are always important to any person
because one can loose their jobs at any minute and instantly have no source of
income. This is why I say having a
safety net is important. When one
has at least 6 months of reserve cash that can cover all expenses then they
will be in better shape. Having
this cash can help to insulate you from not being able to pay a mortgage or car
note in the event that a job is lost.
The next cushion is investments; this can range from stock
to a 401(k) retirement plan. This
is important because if you don’t have the 6 month safety net then hopefully
you can have some investments you can cash out which will put cash in your
hands quickly. Understanding these
investments can prove valuable as so that you can understand the tax
implications of clearing out an investment account in the event of lost
The last area that can help straighten up your financial
house is debt and debt control.
Having debt is something we all have, bun we all need to practice good
debt control so that balance can be paid off as soon as possible. Most of this debt we have will be in
credit cards and those generally carry high interest rates. Sometimes I think debt is the number
one burden for anyone when getting their financial houses in control.
Lastly having financial literacy is so important without it
one can feel as though they are hopeless and that they will never have money
because of debt. If you enact some
of these strategies I just suggested then perhaps more financial stability can
come into one’s life.