Financial literacy, or the ability to make sound financial decisions, can have a significant impact on a person’s future. As such, I hope QCBJ readers will be encouraged this National Financial Literacy Month to educate themselves about the basics of personal finance, taxes, and more. One of the most important aspects of financial literacy is […]
Financial literacy, or the ability to make sound financial decisions, can have a significant impact on a person’s future. As such, I hope QCBJ readers will be encouraged this National Financial Literacy Month to educate themselves about the basics of personal finance, taxes, and more.One of the most important aspects of financial literacy is personal finance, which can include budgeting, saving and spending. Every budget is different, but there are a few ground rules everyone can use when thinking about personal finance. First, keep track of your income and expenses. While this might seem simple, sadly, many Americans get to the end of each month wondering where all their money went. Instead, try using a budgeting tool to get a good idea of your spending habits, then set some basic goals such as building an emergency fund. It’s difficult to plan for every outcome but having a little bit of money set aside can make what would otherwise be a catastrophe much more manageable.Understanding debt is also crucial to becoming more financially literate. While some debt, like a home mortgage, may make sense long-term, credit card debt should be paid off as quickly as possible. Making minimum monthly payments is not enough as interest on the debt will continue to pile up. Many websites offer free calculators to give you an idea of just how much you might be paying in interest each month. Not only will paying off credit card debt save you money on interest, but it will free that money up to be used on things you actually enjoy.Finally, it’s a good idea to educate yourself about the basics of your tax situation. Tuesday, April 18, is Tax Day, and if you haven’t filed your taxes yet, today is a great time to get started!Putting your taxes off until the last minute is a bad idea, especially if you have a more complicated return. However, you do still have time to make sure you get them done right.Take the time to understand your Iowa and federal income tax obligations, as well as the deductions and credits you may be eligible for. If you have any questions, make sure to contact a tax professional. They can answer your questions and help you avoid trouble with the IRS down the road.Best of luck with your financial literacy journey and happy National Financial Literacy Month! Heidi Parkhurst is senior resident director at Merrill Lynch Wealth Management in Davenport and president of Bank of America Iowa.
