Financial Literacy Month has come at a difficult time. The coronavirus pandemic has created a perfect storm. Many families already are feeling the impact with the loss of jobs or reduced incomes, others worry about what the future will bring. Through all of these hardships, there are financial lessons to be learned. This April, the importance of financial literacy can’t be overstated.
TCU offers tools and insights to develop your knowledge and make informed decisions when it comes to investing and managing your money. We hope these resources will help you plan for the expected and prepare you for the unexpected:
TAKE A FINANCIAL LITERACY COURSE – From middle schoolers to adults, it’s never too early or too late to learn the principles of effective financial management. The free TCU Financial Empowerment Program, powered by FoolProof, offers interactive sessions on topics from improving credit scores and avoiding predatory lending to making smart saving and spending decisions. Participants may use one module — or all 18 — and can stop and start at any time. And it’s all free. Get started here.
CREATE AND STICK TO A BUDGET – Take the time to track your income and spending. Then develop personal priorities based on the facts, rather than guesstimates, to establish goals that you want to meet. TCU can help you learn how to create a simple budget here.
EXPLORE BUDGETING WITH A FLUCTUATING INCOME — A challenge for many right now is planning monthly spending plan without knowing how much you’ll earn or when you’ll get your next paycheck. One strategy for making the most of an irregular income is the zero-sum budget. With a zero-sum budget, your income and expenses should even out, so there’s nothing left over at the end of the month. The trick is to treat your savings goals as expenses.
Physically separating your savings from your everyday spending money may be especially important when you’re budgeting on an irregular income. You may be tempted to pull funds from your savings during low-income months, but stashing some money in a separate, higher-yield savings account — like TCU’s Premium Money Market account — can cause you to pause and think twice before dipping in. An easy way to put this tip into action is to have all of your income deposited into one account, then make a “payment” to a separate savings account.
CONSOLIDATE DEBT – For many people, debt burdens drag down their financial progress. TCU can help you consolidate debt to make it manageable and expand your financial freedom to allow you to focus more on long-term goals. TCU’s personal debt consolidation calculator is designed to help determine whether debt consolidation is right for you.
BUILD AN EMERGENCY FUND – The best way to weather low-income periods is to prepare with an adequate emergency fund, setting aside money for expenses such as a medical issue, broken-down vehicle or furlough due to the pandemic. Generally, you’ll want to save enough money to cover three to six months of your regular expenses. Once you build your fund, you can put extra savings toward other financial goals. An emergency fund can help you feel more at ease knowing that you’ll be able to pay your bills and meet your needs even if your income drops.
In the midst of such a difficult time, it’s hard to think long-term, but our current circumstances highlight the importance of practicing financial habits that provide a cushion when the unexpected happens. The goal of financial literacy is to prepare yourself to weather the next storm during the times when clear economic skies prevail.
TCU is here to help you navigate the challenges and to provide guidance toward achieving your personal financial goals. We encourage you to take advantage of the free tools we provide and to contact our team members for assistance.
This article is for informational and educational purposes only and doesn’t constitute legal, tax or investment advice.