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Personal Finance Tips
What Is Financial Literacy?
Financial literacy is knowing what finances are and how to spend, save, and manage money effectively. But it's not a light switch—you don't flip the switch and be done with it. Mismanaging finances can lead to big consequences, and it's not fun to confront that possibility. Still, mastering money management skills is the only way to achieve and maintain financial health.
Embrace Financial Literacy
Everyone has a "financial situation." For some, it's not-so-good. For others, it's great. But everyone, everyone, has one. Financial literacy is the ability to take control of your financial situation.
Take the financial wellness assessment.
You begin learning financial literacy concepts at a young age (the difference between a quarter and a dime). As you grow and mature, your view of money grows and matures, too. Financial literacy switches focus from saving for bicycles and skateboards to taking out a car loan. Or, that anticipation of buying a new gaming system gets pushed aside after realizing you need a home to put it in. This is when many begin to fear finances, unsure of how to manage them. But financial literacy is a topic to be discussed, not avoided—and anticipated, not dreaded.
Broaden Your Perspective
Financial literacy isn't one and done, a concept where you either know it or you don't. The broad view of financial literacy is much more flexible. It's a process where you master and apply skills one at a time. There's no starting point or finish line. You don't have to be in a specific situation to begin; and it's a matter of life-long learning and growth.
Let's break it down. A financially literate person—at a basic level—understands how to pay their bills with the $2,000 they make each month and do it without drowning in debt. At a more intermediate level, this same person learns how to prepare for their future by setting aside some of that $2,000 for emergencies. Someone at an advanced level will budget out 50% of that $2,000 for necessities, 30% for things they want, and 20% for safekeeping. A master at financial literacy can use their knowledge on investments so that a portion of that $2,000 could make them an additional side income. Each level is obtainable, and every level is worth the effort to achieve. All that being said, not many people can become an expert in one day. It takes time.
Try out the 50/30/20 calculator.
Applying What You Know
It's not enough to just know the best money-management practices. Any financially capable individual will tell you that goal setting, planning, and consistent effort is needed to maintain your finances. Someone who applies what they've learned will track spending, maintain a low DTI (debt-to-income ratio), and keep credit card utilization below 30%. (Credit card utilization, by the way, is the amount of credit you used compared to your credit limit.)
Even if you have to start off trampling through piles of debt and diminishing your expenses little by little, your good habits won't last without an effective plan. And that plan is another key element of being financially literate. So, start thinking about your long- and short-term goals, tracking your expenses, building a budget, and creating a detailed plan to move forward.
And in case you're ever wondering how wealthy people do it, begin with the basics and work your way up. Soon people will be wondering how you do it, too.
Try one of our interactive Banzai courses to practice managing money: https://bcb.banzai.org/wellness/collections/banzai-courses.
Save for the Unexpected
Being financially savvy can prepare us for something that we should all actually expect: To have an "unexpected" financial emergency.
Here's how we can check in with ourselves to ensure that we are building an emergency fund. Saving is a habit, not a destination. The best place to put that into practice is when you are building an emergency fund.
20 Reasons to Have at least a $500 Emergency Fund
- Shattered, broken, or stolen cell phone
- Computer hard drive crash
- Emergency visit to the ER/dentist/veterinarian
- Minor car repairs or a fender bender
- Traffic tickets
- Repairing or replacing household items
- Broken instrument
- Travel for unexpected loss/funeral/celebration of life
- Root canal
- Emergency plumber
- Car gets towed
- Flooded basement
- Limb/branch/tree falling on car or house
- Replacement key fob for car
- Calling a locksmith
- Broken/lost glasses
- Prescription costs
- Increase in grocery/utility bills
- Uniforms for kids sports or extracurricular activities
- Rent increase or insurance policy increase
For decades, financial gurus have told us that we need to have 3 to 6 months of expenses saved to be financially secure. While the more you can have socked away for a rainy day, the better, for most Americans, saving that amount is overwhelming and scary. But, when you focus on building your HABIT of saving and start with a small goal of just $500, that seems much more attainable. Then, once you achieve that milestone, you can confidently keep going!
Before you know it, saving has become a lifestyle. You're saving automatically and building your rainy day fund!
Take steps toward building an emergency fund with our online tool: https://bcb.learnbanzai.com/wellness/resources/emergency-fund-coach.
Save by Reducing Debt
By actively reducing your debt, you are saving on interest. When you pay on time, you save on late fees and maintain your credit score—saving money long-term.
With so many Americans being affected financially by the pandemic, actively paying down your debt may not be a priority, and that's okay. Be sure that you talk to your creditors and take advantage of any repayment options or arrangements that allow you to keep your credit score intact and avoid additional interest and late payment fees.
We encourage you to join a community of people on a similar savings journey. The #ThinkLikeASaver Facebook Group is hosted by America Saves and is a great place to get ongoing support and interact with like-minded people committed to saving effectively.
For more tips and resources, including calculators that will help you determine how long it will take to pay off your debt, visit https://bcb.learnbanzai.com/wellness/collections/managing-debt.
Save to Retire
Many of us have thought about retirement. You may already be saving for it, which is excellent. But have you thought about HOW you want to retire? More specifically, have you thought about what it will take to continue to live the lifestyle you have or the lifestyle you want once you retire?
Many Americans have expressed that the pandemic has helped them realize what matters most to them. Family, stability, creating memories, and travel were sentiments that we repeatedly heard when asked what was most meaningful to them. Being able to have the type of lifestyle you want during retirement— spending quality time with loved ones, traveling, and not being a financial burden on your family, means that you have to prepare TODAY.
As you sit down to do a financial check-in within yourself around your retirement today, consider not just IF you're saving for retirement, but if you're saving ENOUGH for retirement.
For more tips and resources, including a calculator that will help you determine how much you should be saving for retirement based on your current scenario, visit https://bcb.learnbanzai.com/wellness/collections/planning-for-retirement.
How Do You Save Automatically?
The two best ways to save automatically are:
- Splitting Your Direct Deposit: Have your employer direct a certain amount from your paycheck each pay period and transfer it to a retirement or savings account (or both). Traditionally, you can set this up using your employer's direct deposit program. Contact your HR representative for more details and set this up today. No amount is too small!
- Setting Up an Automatic Bank Transfer: At a chosen time, your financial institution will transfer a fixed amount from your checking account to a savings account. Talk to your local financial institution to set this up.
Having a "set it and forget it" approach to saving increases your success rate.
Remember, saving is a HABIT, not a destination. When starting your savings journey, getting into the habit of saving is so important. Start small and THINK BIG. Even if your savings goal is $10 a week until you accumulate your first $500 in your emergency fund, you'll be better prepared for those pesky unexpected emergencies and can simply pay it with your cash savings!
Use our savings calculator to get an idea of how much you can save over time: https://bcb.learnbanzai.com/wellness/resources/savings-accounts.
What Grads Really Need This Year: Money
Whether a grad is preparing for college, pursuing more school, or starting their career, money is always a great gift to give. Total gift spending for high school and college graduates was estimated to be $6.4 billion in 2023, with cash continuing to be the top gift1. This next grad season is going to be just as big—if not bigger!
If you find yourself on your way to your niece's graduation party, and suddenly realize you forgot to get him a card, you don't have to rush to find the nearest drugstore and spend time scouring the card aisle for a generic "Congrats, Graduate!" card. And you won't have to open up your maps app and search for the closest ATM.
Luckily, you can quickly and easily send money to your special grad with Zelle®—along with a personalized, congratulatory note.
How to Send a Grad Money with Zelle®
You already have access to Zelle® in the BCB Mobile banking app, so you won't even need to download anything to start sending money. And your grad doesn't have to bank at the same place as you to receive your gift. With just an email address or U.S. mobile phone number, you can send money to them regardless of where they bank.2
Although it can be tempting to get creative with your gift-giving, graduates will undoubtedly appreciate the gift of money as they're preparing to embark on a new chapter of their lives. And with Zelle®, the money will go directly in your grad's bank account and be available for them to spend within minutes.2
Learn more about how Zelle® works.
1Source: NRF's Annual 2023 Graduation Spending Survey, conducted by Prosper Insights & Analytics. 2U.S. checking or savings account required to use Zelle®. Transactions between enrolled users typically occur in minutes. Zelle® and the Zelle® marks are property of Early Warning Services, LLC and are used herein under license.
