Financial Literacy is more than eating rice and beans

It’s April.  Do you know where your money is?  April is Financial Literacy Month and although you won’t get a 3 day weekend to celebrate this “holiday”, it’s a good time to reflect, set goals and learn about money. 

Financial Literacy is more than eating rice and beans for dinner every night or using 3 squares of toilet paper isn’t of 4.  Yes, saving and budgeting are important parts of building a successful financial future, but there’s so much more.  How much do you, your children and your adult children know about personal finance?

A lot of people don’t realize that paying their credit card bill, car payment or student loan payment late just once or twice can really take a dent out of their credit score.  Companies that loan money “talk” among themselves and bad news travels fast.  If you aren’t paying your FasterCard on time, Meeza card might also decide to raise your interest rate.  Paying late usually comes with an added bonus you didn’t ask for –> late fees.  Also, a lower credit score can cost you extra money with higher interest rates when you want to borrow money for something else like furniture or a home.  If your credit score is low enough, it may even prevent you from borrowing additional money.

Let’s switch gears to investing.  Do you and your children really understand what a stock is?  Here are a few brief points to explain stock:

• A company initially issues and sells stock to raise money to operate and grow their business.
• By purchasing stock, an investor actually owns a piece or portion of the company.
• If the company’s stock is actively traded on a stock exchange it can be sold rather quickly to someone else.
• Some companies pay a portion of their earnings as dividends to their stockholders.  Dividends increase the return earned on a stock investment.
• If you sell the stock for more than you paid you will have earned a capital gain which is the increase of the stock’s value.
• Your total return would be any dividends paid + the appreciation of the stock price – any commissions or fees paid.

For more unbiased financial information that’s made easy to understand, consider buying the “Intro to Money” DVD  and our lesson plans for classroom and home use.  Money Lessons for Life also offers Money Field Trips, School Assemblies and private money coaching.

This message has been brought to you by Money Lessons for Life and Garrett Jay.  You can also follow and list me on Twitter