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After Navigation
Home Blog Financial Literacy Starts with Discipline
  • Contents
  • Make the Time to Learn about Money
  • Practice Good Financial Habits
  • Define your Financial Goals
  • Be Dedicated to Establishing Financial Security
financial literacy Chart on the left that says  mindset with attribution words around it such as attitude, behavior, action, results and persistence.  On the right is a hand putting money into labeled jars: car, house, education and investment.

Financial Literacy Starts with Discipline

Last Updated: April 13, 2023
Authored By : Penny Redlin
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April is Financial Literacy Month. Financial literacy is an understanding of basic financial topics such as budgeting, credit, and investments and includes sound financial knowledge of how to manage cash, use credit responsibly, compare investments and understand the basics of retirement planning.

Understanding basic finance principles can help you make responsible financial decisions from an early age which will provide you with a stable financial foundation for the rest of your life.

Make the Time to Learn about Money

Having a basic understanding of financial concepts is critical in today’s digital economy where electronic payments are commonplace and you have multiple options (maybe too many) when it comes to managing your money. Without the right information it can be easy to fall prey to predatory practices such as deceptive marketing techniques set up by scam artists or exploitative loan offers that charge high interest rates. Education is key when it comes to avoiding these pitfalls.

Money Management 101

When managing your money, it is important to practice personal financial discipline and create a plan for how you will manage your funds. Examples of discipline when managing your money include:

1. Setting up a budget and tracking your day to day spending: Creating a budget and sticking to it are key disciplines when managing money. A budget allows you to track your monthly expenses and know exactly where your money is going each month, so that you can make adjustments as needed.

2. Making smart investments: Investing wisely is another essential discipline for personal finance management. Take time to think about the risks involved with different investments and have an understanding of the potential return before investing any money.

3. Creating an emergency fund: Having an emergency fund set aside can help reduce stress if an unexpected expense arises or if there is an interruption in income due to a job loss or illness. 

4. Paying down debt: Paying down debt quickly rather than paying the minimum amount due is one of the most important examples of financial discipline.

5. Saving for retirement: Starting early with retirement savings is another essential example of financial discipline that should not be overlooked.

6. Keep track of your credit history and score: Regularly reviewing your credit history or score will let you stay on top of our credit and prevent any surprises down the road. Not only can you understand your credit standing (i.e., payment history, open and closed accounts, etc.), but you can also proactively flag any issues with incorrect reporting or fraud.

Practice Good Financial Habits

Being intentional with smart money habits can help ensure long-term financial security.  Practicing smart money habits can start simply with tracking expenses and setting a budget. This can help identify areas of overspending and provide an indication of what expenses should be prioritized.

With time on your side, being intentional with investments can help build wealth over time. Learning about different investment opportunities and considering the risk involved can ensure safe and profitable investments that benefit long-term growth.

Avoid the temptation of spending on credit if at all possible.  When you do research rates, fees, rewards programs, etc., to ensure that you get the most out of your credit card or loan agreement.

Define your Financial Goals

Setting financial goals is an important step in creating and maintaining a healthy financial management plan. No matter your current financial situation, setting goals gives you something to strive towards, helping you make progress towards your long-term plans.

When it comes to setting financial goals, it's important to be realistic. Setting too ambitious of a goal can lead to frustration and discouragement if you don't meet the goal. Remember, when setting your goals make sure that each one is specific and measurable. That way, you can easily track your success as you work toward achieving it.

Some examples of financial goals include:

1) Pay off debt: If you have any outstanding debt--whether it's credit cards or loans--make paying them off one of your top priorities. This will help free up extra cash for other savings goals.

2) Save for retirement: Retirement may seem far away now but setting aside money now can help ensure that you're prepared when the time comes.

3) Build an emergency fund: It's always important to have an emergency fund set aside in case of any unexpected expenses that might arise like medical bills or home repairs. Aim to save at least three months' worth of living expenses in your emergency fund.

4) Set aside extra funds for special occasions: It’s important to enjoy life. Whether it's saving up for a vacation or just having some extra spending money around the holidays, setting aside some extra cash here and there can definitely come in handy from time to time.

5) Invest in yourself: Investing in yourself doesn't necessarily mean shelling out tons of money on classes or programs (although those are great!). It could even mean something as simple as taking up a new hobby or dedicating more time to developing relationships with friends and family.

No matter what kind of financial goals you decide on, make sure that they are realistic and achievable--and then create an action plan so that you stay on track!

Be Dedicated to Establishing Financial Security

Financial security means having enough wealth and income to provide stability and the ability to cope with difficult economic conditions. It also involves having a financial plan in place that ensures you are able to meet your long-term financial goals, such as retirement, without facing unexpected risks or hardships. Having a good credit score, investing for the future and limiting debt are all factors of achieving financial security.

As a young person today you are in an enviable position when it comes to building a secure financial future. With access to technology, financial education, and an awareness of the importance of planning for the long term, you are well-positioned to build a bright financial future.

Here are some tips setting yourself up for financial security later on in life:

1. Start Saving Early: Getting into the habit of saving at an early age is critical for building a secure financial future. Starting small and gradually increasing savings over time can help you reach your goals easily. Even setting aside a small portion of each paycheck can add up over time and create significant savings with compound interest. The Rule of 72 says to divide your savings interest rate into 72 to see how many years it will take to double your money. For example it will take 9 years to double your money at 8% interest.

2. Save Automatically: Setting up automatic transfers from checking accounts to savings accounts helps individuals save without having to remember or make conscious decisions about saving money. This approach helps ensure that money is being saved even if other discretionary expenses take precedence in any given month.

3. Take Advantage of Employer Matching Programs: Many employers offer 401K matching programs, which can be an invaluable tool for retirement savings. By contributing enough to get the full match, employees receive free money that otherwise may not have been available.

4. Consider Investing: Investing money in stocks, bonds, or mutual funds can help you grow your wealth quickly over time through compounding interest rates and market gains. However, investing comes with risks and should not be done blindly without research or proper guidance from experts.

5. Build Credit Responsibly: A good credit score is essential for getting approved for car loans, mortgages, or credit cards down the road; therefore it’s important for you to develop smart habits around building credit responsibly from the start by paying bills on time and avoiding taking on too much debt too soon in life.

By implementing the wealth of information (pun intended) available to you early on in your life, you will be well-prepared to handle more complex financial decisions down the line as you progress toward your financial goals of security and stability later on in life.

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Find information on this site to help you plan and pay for college as well as manage your money with confidence.

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Edvisors (“Edvisors Network, Inc.”) provides independent advertising-supported platforms for consumers to search compare and apply for private student loans. Loan offers from participating lenders that appear on our websites are not affiliated with any college and/or universities, and there are no colleges and/or universities which endorse Edvisors’ products or services. Lender search results do not constitute an official college preferred lender list. Edvisors receives compensation from lenders that appear on this site. This compensation may impact the placement of where lenders appear on this site, for example, the order in which the lenders appear when included in a list. Not all lenders participate in our sites and lenders that do participate may not offer loans to every school.

Edvisors is not a lender and makes no representations or warranties about your eligibility for a particular loan or financial aid. Lenders are solely responsible for any and all credit decisions, loan approval and rates, terms and other costs of the loan offered and may vary based upon the lender you select. Please check with your school or lender directly for information related to your personal eligibility.

Edvisors has endeavored to provide accurate information. However, the results provided by lenders are for illustrative purposes only and accuracy is not guaranteed, as such, Edvisors assumes no responsibility for errors or omission in the information provided.

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