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  • Posts Tagged ‘Education’

    Here’s Why Financial Literacy Is For Everyone

    Thursday, April 20th, 2017

    little blog pictureApril is Financial Literacy Month.

    “Financial Literacy” is a somewhat new term and trend in the United States, and for that reason, some find it off-putting and discouraging. Don’t let the fancy phrasing scare you, though. The reality is, financial literacy simply means knowledge about money and savings. Even though most of us didn’t learn the basics of financial knowledge in an educational setting (hopefully that will change in the future!), important, life-changing saving information is easily within reach.

    In fact, understanding of the importance of financially literacy only became widespread in the past fifteen years or so. In 2002, the U.S. Department of Treasury created the Office of Financial Education as a way to organize its efforts in the area. The next year, Congress passed the Fair and Accurate Credit Transactions (FACT) Act, which established the Financial Literacy and Education Commission, a group that later published a “National Strategy on Financial Literacy.”

    That means that, hopefully, financial education will become a standard and required part of education. However, just because it wasn’t something you learned about in school doesn’t mean you cannot become extremely knowledgeable on investing, saving, retirement and other financial topics. It is important for everyone to educate themselves about their finances, but know that you don’t need to be a financial expert to make smart decisions. Some basic information can go a long way.

    In particular, it is important to know what you should be doing at every stage of life to make sure you are on track financially and preparing for long term financial security. WISER’s “7 Life Defining Financial Decisions” booklet breaks down key topics into stages and explains how to approach each one.

    For example, when it comes to jobs and careers, when taking a job, consider not only salary but also benefits. There are two basic kinds of employer-sponsored pension plans: defined benefit and defined contribution plans. When leaving a job, it is important to consider that changing jobs, even for higher pay, can cost you a bundle in lost benefits and retirement income. If at some point in your life you decide to stay home full time, think through the family finances, including retirement planning. Where there are large upsides, you will lose compensation, benefits, job skills and contacts if you leave work completely.

    The booklet offers more advice on financial decision-making at every stage of life. By focusing on life stages and basic information, financial literacy is within reach for everyone.

    The Kids Are All Right. But How Are You?

    Monday, August 25th, 2014
    Summer is winding down, and it’s often a time of change. Each year, many of us watch as our children go off to school and college. This change is big, not only for the kids, but also for the parents.  In addition to the emotional aspects and changes to the daily family routine, it can also mean a big change for your family finances as well.

     

    For the past several years, Sallie Mae has put out a study, “How America Pays for College,” to examine the decisions and funding sources that go into paying for a child’s college education in the United States. The 2013 report  found that average costs of college in 2012-2013 was $21,178. Parents paid 27% of that cost, close to $6,000.

     

    The difference between what you have saved for your kid’s college, and what it actually costs, can be large. This gap can lead parents to make some poor financial decisions. For example, this year’s Sallie Mae report found that one out of 10 parents said they are planning to tap into their retirement funds to help pay for the cost of college. While this may solve the immediate problem, it could lead to many more problems down the road if you have to turn to your kids to help support you in retirement.

     

    If your child has just graduated from high school or college, you may be sighing with relief because she has found a job, and you can start putting the money you were giving to her directly into your savings and retirement accounts. But, if your child is like 36% of 18 to 31 year olds in the US, she is still living at home, and likely unemployed.

     

    With these realities, it can be tough to continue to save for retirement.  But it is important to keep saving.  Start by keeping the basics in mind, set moderate goals, and work to achieve them.  Here are three steps and ideas:

     

    1. Saving a little is a big step! Start saving today, with whatever amount you can. Putting small amounts away for many years will add up.  Work on putting 10-15% of your income into your retirement account every month. That is a large goal, and one you can build up to. You can also help yourself by helping your children. Get them started on saving now, so they will ask less from you later. WISER has 5 saving tips for young people that can get you started.

     

    2. Find creative ways to reduce everyday expenses. Get a small notebook and Piggy Banktrack everything you spend money on for 3 months. Then identify patterns that you can change. For example, if you see that you buy two cups of coffee every day, only buy one, and put the money you were using for the second up into your retirement savings. Other ways to reduce your expenses might include driving less and walking more, or taking more public transportation. Remember to utilize public resources, such as your local library, where you can check out movies, tools, and books for free, and your local recreation center, where you can often swim or exercise much more cheaply than at private, membership facilities. Take a look at some of our previous blogs on budgeting to help you find ways to cut expenses.

     

    3. Plan to work longer. Retirement age isn’t what it used to be; people now live longer and are healthier longer. Put off retirement a little longer so that you can continue to save money for an extra few years. If you can, wait to start collecting Social Security after age 65, not before, in order to maximize your Social Security benefits. Learn more about how your benefits can increase.

     

    Wanting to help your kids financially is noble, but it comes with trade-offs.  You don’t want to support them financially to the detriment of your own retirement savings. The 2013 Sallie Mae report found that the largest source of college funding actually came from grants and scholarships. So make sure to look into all the different funding sources that are available for college, and make your retirement account off limits.  If you want more information about how much money different colleges will cost, check out the Consumer Financial Protection Bureau’s Paying for College  website, which has lots of information and handy guides to help you better understand your options.

    WISER

    About Us

    WISER is a nonprofit organization that works to help women, educators and policymakers understand the important issues surrounding women's retirement income. WISER creates a variety of consumer publications including fact sheets, booklets and a quarterly newsletter that explain in easy-to-understand language the complex issues surrounding Social Security, divorce, pay equity, pensions, savings and investments, banking, home-ownership, long-term care and disability insurance.

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