Tips for investing in education this Financial Literacy Month

Tips for investing in education this Financial Literacy Month

By Kate Yoho, CFP®, TBH Advisors

April is Financial Literacy Month, which reminds us of the value of investing in our own financial education and how it can enable us to make responsible, well-informed choices. While some may think financial illiteracy plagues only younger generations, it’s reported only 17% of American adults ever took a personal finance class in high school. We know the complexities of finance can be overwhelming and intimidating, and in some cases, without support from a financial advisor, it can also be costly. 

The Cost of Financial Illiteracy  

Last year, Americans estimated that they lost an average of $1,506 due to a lack of knowledge around personal finances, according to the National Financial Educators Council. As a Certified Financial Planner® who has spent my career helping clients through a wide range of complex situations, I believe there can be a much higher cost. Oftentimes, an expensive misstep is a catalyst for individuals to seek a deeper understanding of their money. However, even the smallest mistakes can add up, such as overdraft fees from a debit card, overspending on a credit card, or forgetting to pay a bill. As such, it’s important to be informed about the consequences of each financial decision, no matter the severity.

Retirement planning is one of the most common concepts I’ve noticed clients have questions and confusion about. For many individuals, their retirement account is their biggest asset, so it’s essential to have an understanding of systems like Social Security and pensions, as well as the value of compound interest. Education is a fundamental step in your financial well-being and doing your due diligence to gain a better understanding is necessary. In doing so, you can feel more empowered to make decisions, envision your future, and ask your advisor questions.

Jargon is another common area of confusion. With plenty of concepts and acronyms from RMD to IRA, APR and ETF, there’s a lot to comprehend. Your employer may have resources for you such as your retirement plan advisor; you can also chat with your favorite bank teller, or a friend in the industry, or look to trusted websites like Investopedia. Acknowledging where you see gaps in your own financial literacy and taking the initiative to fill them is the first step.

Bridging the Financial Literacy Gap

Working with a trusted advisor is one way to really deepen your knowledge and understand your unique situation. Through open dialogue and customized advice, advisors can jumpstart financial understanding. These types of conversations allow advisors to tailor their advice and lean into the topics you are struggling with the most, ensuring that strategies align with your goals.

The path to financial literacy can seem daunting. At TBH Advisors, we’re here to help you understand your money world and create a plan tailored to your needs and goals. Contact us if you have questions about your financial plan, investments, retirement outlook, and more.

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