Are You Always Broke? This Could Explain Why
If financial literacy was a course in college, the many of us would not pass. This is the surprising result of the Financial Literacy Survey that was taken by the National Foundation for Credit Counseling.
Because of this, the survey is just confirming what most of us already know – we need to be educated when it comes to financial matters. Without the awareness and knowledge on how to make sound and informed financial decisions, we are always treading on thin ice while trying to get back up from the setback that was the Great Recession.
Here are some of the findings from the survey, and were found to be the most common reasons why many people are broke.
- No set budget. Deemed as the building block of ensuring financial stability, a staggering 61% of survey respondents admitted that they do not have a budget to work around with.
- Credit card debt.The survey also finds that 34& of the respondents carry credit card balances month per month. What’s even worse is that 15% of these people admit that their balances roll over at thousands every month. This will then translate to hundreds in interest and penalties in a year alone.
- No savings. It was also realized that about 35% of the respondents do not have any kind of savings account – for emergencies, future usage, and even retirement.
- Late bills payment. There are 25% of the respondents who said that they do not pay their bills timely. Because of this, they end up being charged more with late payment fees as well as higher interest rates on credit cards. Furthermore, late payments also hurt an individual’s credit rating.
At the end of the survey, the respondents were asked to rate themselves when it comes to financial literacy – and the result is shocking. 41% admit that they would have gotten a C, D, even an F – because they are aware that they don’t know enough, and yet do not take the proper measures to be informed.
The results may be dreadful, but you don’t have to keep on living like this. Here are some tips on how you can manage your finances better so you won’t end up penniless.
- Know your net pay. Analyze your income and calculate how much you actually receive after taxes. This way, you can have a starting point of how much you have to on a monthly basis – as this is where your expenses and bills payment will come from. With this knowledge, it will be easier to set up a spending and budget plan.
- Track all major expenses. These are the expenses that are fixed – meaning that you will have to spend on them every month. These would include rent, mortgage, car and gas, and utilities that you are subscribed to. Start by subtracting the payment amounts from your net pay to see how much you will have left. Major expenses are non-negotiable and as such, it is best that you first allocate your funds to pay for these.