April is National Financial Literacy Month

Editors Note: The author of this post, Carleda Johnson, is an Independent Living Skills Coordinator at Access Living. She teaches our money management classes, also known as our Financial Literacy Workshops, which are geared toward people with disabilities who want to improve their credit, learn to budget, save for the future, and increase their employment and home-ownership opportunities.

April is National Financial Literacy Month- Time to Think Ahead

Many of us don’t know as much about managing our personal finances as we would like to, and during times of crisis, change, or stress, good money management tends to become top of mind.

April is Financial Literacy Month and in recognition of that, I’m going to take a moment to talk about how we all can learn how to gain our financial freedom. Having a clear and accurate picture of where we are with our finances and knowing where we would like to be, helps us to better manage our money.

One of the most important things I’ve learned while teaching financial literacy at Access Living is that managing our finances is one of the single most important accomplishments we can achieve. Every aspect of our lives and our family’s life depend on it. So many of us are under-educated about our personal finances, but that’s ok! We can learn all the things we need to know and increase our financial literacy.

Money management has two main compenents: budgeting, and understanding our emotional attachment/relationship with money. Our emotional connection with money is particularly important because it can dictate o what we buy, what we place value on, and how we prioritize what we buy. Because we tend to focus on the here and the now, we don’t always think about how a financial decision we make today might affect us for years to come. This is why it’s important for us to start thinking about and learning how to build a stable financial future for ourselves and our families over time.

To celebrate National Financial Literacy Month, I will be publishing regular ‘Financial Literacy Tips’. I hope these little tips help you as much as they have helped me on my own journey to becoming financially savvy.

– Carleda Johnson

Financial Literacy Tips:

Tip One- Keep your credit card balances below 30% of your credit limit.

Why: Anything above 30% can cause your credit score to drop, and the amount of credit you use (also known as Credit Utilization) accounts for a large percentage of most credit scores.

Example: If your credit limit is $1,000 and you want to stay under 30% of your credit limit, you should be using no more than $300.

How do you calculate your credit utilization?
For this calculation you’ll need your current credit card balance (how much you’ve spent) as well as your credit card limit, and you’ll use the following equation:
CC Balance / CC Limit X 100 = Credit Utilization

Let’s look at an example:
Your credit card balance is $4,300
Your credit card limit is $6,000
1,700 / 6,000 X 100 = 28
Therefore, your Credit Utilization is 28%. Congratulations! You’re balance is under 30% of your credit card limit.

Tip Two – Brief Budgeting Basics

• Budgeting (deciding how you want to spend your money) is a declaration of your priorities.
• Budgeting is taking time to review your purchasing behavior.
• Budgeting isn’t really about math; it’s about planning.