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Weekend Madness

Donell Edwards, Blogger

DONED2014 SmallAbout Donell Edwards: Donell Edwards is President of CWR Media and is also founder and publisher of The College World Reporter (CWR) magazine and CWR World News & Information Service.  He is also a professional speaker, freelance writer, and entrepreneur.

 

 

Know Your Money
Friday – May 23, 2014

Knowing Your Personal Finances
Weekend Madness
By Donell Edwards

 

If you’re like me, this has been a tough week and I’m ready for the weekend.  However, don’t forget that managing personal finances never takes a day off.  So, enjoy yourself, but don’t splurge, stay on your budget, and manage your spending wisely.  This week the late and truly great Maynard Ferguson takes us into the weekend with an appropriate musical selection for the occasion, the theme from “Rocky”, Gonna Fly Now, and nobody does this song like Maynard.  Have a great weekend.

 

 

 Family Standing Behind a Car at a Picnic Spot

 

 

 

 

 

If you have questions or need help we are just an email away.  Send your questions to Info@KnowYourMoneyGlobal.com

 

We Would Like To Hear From You.  Are There Any Brave Souls Out There Willing To Share?
If you would like to share with our readers how “bad” spending habits have affected you, anonymously or otherwise, for our upcoming special, “Confessions Of Spendaholics,” please send your experience to comments@knowyourmoneyglobal.com.

 

Follow us on Twitter for more information about personal money management
https://twitter.com/Kn0wY0urM0ney

 

Disclaimer:  I have a Bachelor of Business Administration degree but I am not a financial adviser. However, I have acquired years of knowledge about personal money management through my life experience working through my own personal finances that allows me to share that knowledge with readers of Know Your Money. The Know Your Money Blog posts written by me are my own common sense observations and opinions and are for informational use only. Although my blog includes contributions from experienced financial professionals, please make your own financial decisions based on personal research or contact a financial adviser.

 

Copyright © 2014 CWR Media – All Rights Reserved

 

 

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Knowing Your Personal Finances: Budgeting Effectively

Donell Edwards, Blogger

DONED2014 SmallAbout Donell Edwards: Donell Edwards is President of CWR Media and is also founder and publisher of The College World Reporter (CWR) magazine and CWR World News & Information Service.  He is also a professional speaker, freelance writer, and entrepreneur.

 

 

Know Your Money
Wednesday – May 21, 2014

Knowing Your Personal Finances
Budgeting Effectively
By Donell Edwards  

 

Do You Have A Budget?

According to a 2013 Gallup Poll, Gallup’s Annual Economy and Personal Finance Survey for 2013, says nearly two-thirds of Americans do not prepare a detailed written or computerized budget every month.  If you are among those 67% who do not have a budget, why not?  As we have mentioned repeatedly in this blog, one of the first steps to effective personal money management is having a realistic and complete budget.  Your budget is your roadmap to your personal finances.  Not having a budget is like trying to travel to some place that you have never been before, and you have no idea how to get there, and you do not have a roadmap or any directions.  

 

Why Having A Budget Is Important Having a budget is important for a number of reasons.  A budget should take into account everything you plan to spend during the month.  The budget will reveal if you are overspending and don’t have enough money to cover all of your projected expenses.  This will allow you to make adjustments, and really determine what are real needs and what are just things that you want.  If you are in a situation where you have long-term commitments that cannot be eliminated immediately, the budget will help you to see what you need to do to work to live within your means.  If you follow the budget, you will also learn discipline, sacrifice, and how to develop the willpower to resist the temptation to spend frivolously.  The budget will also help you to do an effective job of regularly monitoring your spending.    

 

 

thinking businessman

 

 

How To Plan A Budget

Whether you are using a written budget or computer software, your budget should include everything that you spend during the month.  This includes your household expenses like mortgage or rent, utilities, grocery, and vehicle payment, insurance, recreation, fees for clubs or organizations, clothing, saving, and anything else that you will purchase or spend money on during the month.  If you have pocket change or use the ATM frequently for miscellaneous things during the week, make sure that this is included in your budget, and that you do not spend more than you have allowed in your budget.  A good practice is to give yourself an allowance for those things so that you know how much you have to spend, and you make sure that you do not spend more than you have allowed.  Your budget should be based on your normal income, not overtime that you expect to work, not bonuses you expect to receive, nor any tax refunds or anything other than your regular income.  Then, based on your income, prepare your budget and make sure that the total budget does not exceed your earnings or income.  

 

A detailed, realistic budget is a must in order to effectively manage personal finances.  So, if you do not have a budget, make it a priority today to sit down and take the time to plan your budget, and make the commitment to live rigidly within the budget you establish.  

 

To find resources to help you plan your budget see our March 4, 2014 post, Budgeting and Spending Resources.  We also encourage you to read today’s Must Read, 10 Steps to Making A Financial Budget.

 

Must Reads: 10 Steps to Making A Financial Budget

 

If you have questions or need help we are just an email away.  Send your questions to Info@KnowYourMoneyGlobal.com  

 

We Would Like To Hear From You.  Are There Any Brave Souls Out There Willing To Share? If you would like to share with our readers how “bad” spending habits have affected you, anonymously or otherwise, for our upcoming special, “Confessions Of Spendaholics,” please send your experience to comments@knowyourmoneyglobal.com.  

 

Follow us on Twitter for more information about personal money management https://twitter.com/Kn0wY0urM0ney  

 

Disclaimer:  I have a Bachelor of Business Administration degree but I am not a financial adviser. However, I have acquired years of knowledge about personal money management through my life experience working through my own personal finances that allows me to share that knowledge with readers of Know Your Money. The Know Your Money Blog posts written by me are my own common sense observations and opinions and are for informational use only. Although my blog includes contributions from experienced financial professionals, please make your own financial decisions based on personal research or contact a financial adviser.  

 

Copyright © 2014 CWR Media – All Rights Reserved  

 

Special Savings Series: Getting Started – Do You Have What It Takes?

Donell Edwards, Blogger

DONED2014 SmallAbout Donell Edwards: Donell Edwards is President of CWR Media and is also founder and publisher of The College World Reporter (CWR) magazine and CWR World News & Information Service.  He is also a professional speaker, freelance writer, and entrepreneur.

 

 

Know Your Money
Monday – May 12, 2014

Knowing Your Personal Finances
Special Savings Series:  Getting Started – Do You Have What It Takes?
By Donell Edwards

 

Good morning everyone!  This week we zero in on saving, following up on our special series last week on managing debt.  Hopefully, you are at a point in the process where you have begun to carefully monitor your spending on a regular basis, you are evaluating your spending and eliminating wasteful spending and overcoming bad habits, you have prepared and are rigidly following a realistic budget, and you have gotten your debt under control, or you are in the process of doing so.  These are all steps that must be in place and should be accomplished before seriously working to have a successful savings plan.  One other important step in the process is implementing an emergency fund, which we have discussed briefly in previous posts.

 

Our special series this week will discuss saving directly, as well as other aspects related to your success in establishing and maintaining a successful savings plan.

 

So, are you really ready to start saving?  Over the past two months we have talked about the importance of controlling spending, and the fact that in addition to having a realistic budget and doing the proper planning, it takes sacrifice, willpower, determination, and a willingness to change in order to successfully control spending.  Obviously, in order to save there must be funds to save.  Those funds should come from effectively managing the income that you have, implementing and closely following your budget, and paying down your debt.  As you pay down your debt or receive income occasionally from other sources, use that money for your savings.

 

The first savings project you should have is your emergency fund.  One of today’s Must Reads, Before You Start to Pay Off Debt…Do This,  discusses the importance of an emergency fund.  It is important that you have planned so that once you start saving there will not be anything to interrupt your regular contributions to your savings.  That is where your emergency fund comes in.  There will be unscheduled expenses like vehicle repairs, appliance repairs, home repairs, paying for insurance co-pays or deductibles, and a variety of other things.  An emergency fund allows you to continue to follow your budget and continue to save and care for those expenses.

 

 

Smiling African American businessman

 

 

Most experts recommend having an amount equal to six months living expenses in your emergency fund.  It is a good idea to do this in stages.  First set a goal to accumulate at least $1,000 in your emergency fund.  Do not spend this money for vacations or anything other than real emergencies.  Then as your next goal build that amount to 3 months living expenses.  Once you achieve that goal, then continue until you have 6 months living expenses.  After you reach 6 months living expenses continue to add to the fund until you feel comfortable that you have enough breathing room in case of a severe emergency.  And again, do not spend this money for anything other than emergencies.

 

As mentioned earlier, it will take sacrifice, willpower, and determination to stay with your savings plan.  But, if you are not a person who understands the importance of making sacrifices, if you do not already have willpower, and if you are not determined, how do you acquire these qualities.   In our other Must Read for today, 9 Ways to Harness Your Willpower to Save Money, writer Marilyn Lewis cites a comment from a book review in Mother Nature News from The Power of Habit by Charles Duhigg showing how habits begin with conscious choices, “Then we stopped making a choice, and the behavior became automatic. It’s a natural consequence of our neurology. And by understanding how it happens, you can rebuild those patterns in whichever way you choose.”  So, by repeatedly exercising self-restraint, resisting temptation, and making sacrifice, these choices become habits.  These qualities can be learned with time and effort.

 

So, do you have what it takes to become a saver?  If you don’t, now you know how to get it. 

 

Must Reads:

Before You Start to Pay Off Debt… Do This
http://www.enemyofdebt.com/2014/01/before-you-start-to-pay-off-debt-do-this/

 

9 Ways to Harness Your Willpower to Save Money
http://blog.credit.com/2014/02/9-ways-to-harness-your-willpower-to-save-money-75365/

 

 

If you have questions or need help we are just an email away.  Send your questions to Info@KnowYourMoneyGlobal.com

 

We Would Like To Hear From You.  Are There Any Brave Souls Out There Willing To Share?
If you would like to share with our readers how “bad” spending habits have affected you, anonymously or otherwise, for our upcoming special, “Confessions Of Spendaholics,” please send your experience to comments@knowyourmoneyglobal.com.

 

Follow us on Twitter for more information about personal money management
https://twitter.com/Kn0wY0urM0ney

 

Disclaimer:  I have a Bachelor of Business Administration degree but I am not a financial adviser. However, I have acquired years of knowledge about personal money management through my life experience working through my own personal finances that allows me to share that knowledge with readers of Know Your Money. The Know Your Money Blog posts written by me are my own common sense observations and opinions and are for informational use only. Although my blog includes contributions from experienced financial professionals, please make your own financial decisions based on personal research or contact a financial adviser.

 

Copyright © 2014 CWR Media – All Rights Reserved

 

 

Starting An Emergency Fund: The Challenges

Donell Edwards, Blogger

DONED2014 SmallAbout Donell Edwards: Donell Edwards is President of CWR Media and is also founder and publisher of The College World Reporter (CWR) magazine and CWR World News & Information Service.  He is also a professional speaker, freelance writer, and entrepreneur.

 

 

 

We’re Celebrating Financial Literacy Month

  

Know Your Money
Wednesday – April 30, 2014

Knowing Your Personal Finances
Starting An Emergency Fund:  The Challenges
By Donell Edwards

Starting an emergency fund is a must to ensure personal financial stability.  However, there may be a number of challenges for some in taking the steps necessary to set up an emergency fund.  We will discuss those in today’s post, in addition to why an emergency fund is so important.

Life is filled with surprises and all of them are not good.  Loss of employment, injuries, accidents, deaths, births, fires, health issues, family problems, floods, tornadoes, burglaries, and a plethora of other surprises can cause havoc on a person’s budget and personal finances.

Although there is no way to have a contingency plan for every unexpected life event, it is wise to plan for the unexpected in such a way that it provides us with the maximum protection available.

Building an emergency fund so that we have money available and ready when a major vehicle expense occurs, or an appliance needs to be replaced, or when health issues cause unexpected expenses, or when for various reasons we may become unemployed, or a number of other things that may happen, an emergency fund will help us through these situations without experiencing financial disaster.

However, in order to start an emergency fund takes sacrifice, just like we discussed in our post yesterday.  It means reducing or eliminating some of the things we do and enjoy.  It means finding ways to save on purchases and always being conscious of the need to spend wisely.

 

Father and Children Sitting by Bay

 

 

So, the major obstacles to getting started are our views of spending and our willingness to change, and being willing to make sacrifices.  Some also have to contend with not having enough income to get started.  If you are in that position we encourage you to continue working to get to the point where you can start an emergency fund, and until then, whenever you do have anything that you can set aside get in the habit of saving.  Begin changing your mentality about money and spending.

There are a variety of opinions on how much should be put into an emergency fund, whether to pay off debt first, how to get started, etc.  We offer three articles for you to consider in our Must Reads at the end of this article.   The key point is to use what works best for you, but make sure that you do start an emergency fund.

Another question is where to save the money in your emergency fund.  I am not a fan of savings accounts because the interest is too low, and with many banks, if you do not read the fine print you will get hit with all kind of charges and will actually lose money instead of earning interest.

However, getting started, using a savings account may be your best option.  I do recommend looking into saving with a credit union first rather than a bank.  The interest rates for many credit unions is higher than with banks.  Another option is looking into purchasing Certificates of Deposit (CDs).  Check with your bank or financial adviser and compare the interest on CDs with the interest on savings accounts and decide which is best for you.

Another word of caution.  The purpose of the emergency fund is to help in case of actual emergencies.  It is not a savings account for vacations, for major purchases, or anything other than real emergencies.  So, money put in the emergency fund should be left there until an emergency occurs. 

 

As Financial Literacy Month comes to an end, we are reviewing Money Management International’s Thirty Steps to Financial Wellness.   Today we review steps 21 through 30.

  • Document your spending
  • Identify ways to reduce spending
  • Save money on groceries
  • Share a tip for change
  • Document your desired spending
  • Protect yourself by performing financial check-ups
  • Understand the cost of credit
  • Assemble a financial team
  • Appreciate the benefits
  • Moving forward

 

If you have questions or need help we are just an email away.  Send your questions to Info@KnowYourMoneyGlobal.com

 

We Would Like To Hear From You.  Are There Any Brave Souls Out There Willing To Share?
If you would like to share with our readers how “bad” spending habits have affected you, anonymously or otherwise, for our upcoming special, “Confessions Of Spendaholics,” please send your experience to comments@knowyourmoneyglobal.com.

 

Must Reads:

How Much Money Do I Need In An Emergency Fund?
http://tinyurl.com/kymemergencyfundamount

 

Emergency Fund or Debt Repayment First
http://ht.ly/teqpV

 

Before You Start to Pay Off Debt … Do This
http://www.enemyofdebt.com/2014/01/before-you-start-to-pay-off-debt-do-this/

 

Follow us on Twitter for more information about personal money management
https://twitter.com/Kn0wY0urM0ney

 

Disclaimer: I have a Bachelor of Business Administration degree but I am not a financial adviser. However, I have acquired years of knowledge about personal money management through my life experience working through my own personal finances that allows me to share that knowledge with readers of Know Your Money. The Know Money Blog posts written by me are my common sense observations and opinions and are for informational use only. Although my blog includes contributions from experienced financial professionals, please make your own financial decisions based on personal research or contact a financial adviser.

 

Copyright © 2014 CWR Media – All Rights Reserved

 

 

Application and Implementation

Donell Edwards, Blogger

DONED2014 SmallAbout Donell Edwards: Donell Edwards is President of CWR Media and is also founder and publisher of The College World Reporter (CWR) magazine and CWR World News & Information Service.  He is also a professional speaker, freelance writer, and entrepreneur.

 

 

 

We’re Celebrating Financial Literacy Month

 

Making Toast at Party

 

Know Your Money
Tuesday – April 29, 2014

Knowing Your Personal Finances
Application and Implementation
By Donell Edwards

 In today’s blog we continue our celebration of Financial Literacy Month with 10 more of the steps to financial wellness from our friends at Money Management International.  We also discuss our topic for today, application and implementation of vital components of the Know Your Money Personal Money Management Program:  Monitoring Spending, Evaluating Spending, Preparing A Realistic Budget and Living Rigidly  Within It, Transforming Your Thought Process About Money Management and the Willingness to Change, and Overcoming Credit Card Addiction.

I found a very interesting article which is our Must Read for today written by a young newlywed couple, Vanessa and Jacob (The Cash Cow Couple).  In the article Vanessa shares her experience of how she had an enormous student loan debt before she and Jacob married.  Vanessa was overwhelmed with the thought of having to repay such a large debt.  However, her fiance Jacob realized what needed to be done.  It was going to be necessary for them to make a major sacrifice in order to start their lives on a strong financial foundation.  So, Jacob told Vanessa that they would have to sell her car and then they would have only one car that they would have to share.  Obviously Vanessa objected, she had worked very hard to pay off the car, but she agreed and the car was sold.  The money from the sale of the car was enough to pay off most of the student loan.

The lesson, sometimes it is necessary to make great sacrifices in order to improve our financial health.  I really like the way Vanessa puts it, “… there is a strong component of sacrifice involved in all things money related, whether that is saving, investing, spending wisely, financial freedom, etc. They were all birthed by the mother of sacrifice and thrive under her careful instruction.” – See more at: http://cashcowcouple.com/life-lessons/importance-sacrifice/#sthash.Ef51VCSE.dpuf

So, today’s lesson is to learn to sacrifice, and be willing to sacrifice.  It going to take lots of  sacrifices to implement the changes you will need to make on your journey to financial freedom.

As Financial Literacy Month winds down, we are reviewing Money Management International’s Thirty Steps to Financial Wellness.  Yesterday we reviewed the first ten steps.  Today we review steps 11 through 20.

 

  • Set SMART financial goals
  • Set short-, mid-, and long-term goals
  • Pay down your debt
  • Expect the unexpected
  • Secure your financial future
  • Make a commitment
  • Save for your goals
  • Where does all the money go?
  • Identify and document fixed monthly expenses
  • Identify and plan for periodics

 

If you have questions or need help we are just an email away.  Send your questions to Info@KnowYourMoneyGlobal.com

 

We Would Like To Hear From You.  Are There Any Brave Souls Out There Willing To Share?
If you would like to share with our readers how “bad” spending habits have affected you, anonymously or otherwise, for our upcoming special, “Confessions Of Spendaholics,” please send your experience to comments@knowyourmoneyglobal.com.

 

Must Reads:

The Importance Of Sacrifice
http://cashcowcouple.com/life-lessons/importance-sacrifice/

 

Follow us on Twitter for more information about personal money management
https://twitter.com/Kn0wY0urM0ney

 

Disclaimer: I have a Bachelor of Business Administration degree but I am not a financial adviser. However, I have acquired years of knowledge about personal money management through my life experience working through my own personal finances that allows me to share that knowledge with readers of Know Your Money. The Know Money Blog posts written by me are my common sense observations and opinions and are for informational use only. Although my blog includes contributions from experienced financial professionals, please make your own financial decisions based on personal research or contact a financial adviser.

 

Copyright © 2014 CWR Media – All Rights Reserved

 

 

Knowing Your Personal Finances: Are You Ready To Save?

Donell Edwards, Blogger

DONED2014 SmallAbout Donell Edwards: Donell Edwards is President of CWR Media and is also founder and publisher of The College World Reporter (CWR) magazine and CWR World News & Information Service.  He is also a professional speaker, freelance writer, and entrepreneur.

   

 

We’re Celebrating Financial Literacy Month

People Dancing at a Discotheque

 

Know Your Money
Wednesday – April 23, 2014

Knowing Your Personal Finances: Are You Ready To Save?
By Donell Edwards

 

For weeks now we have discussed knowing your personal finances by making a thorough evaluation of debts and expenses to determine just what condition your finances are in.  We have also strongly recommended that you use some method to monitor spending on a regular basis each day and identify any wasteful spending habits and eliminate them.  We have discussed the importance of acknowledging the need for help if your assessment indicates your finances are out of control, and it is apparent that you lack the knowledge or the will to correct matters by yourself.  

 

We have also emphasized the need to have the willingness to make behavioral changes in one’s thinking, methods, and approach to money management. It has been less than two months since this blog was launched, and in that short span of time many are no doubt still working on all of the things mentioned above.  

 

But as we have previously mentioned, everyone is at a different level financially, and will fall into one of three categories: (1.)  Those in dire need for help and who are living from paycheck-to-paycheck.  (2.)  Those who are managing and have a little money left after paying bills each month but who could do better.  (3.)  And those who are in great shape and just need to continue to monitor things and build on their success.

 

So, are you ready to save?  Your current level will determine if you are ready to move on now to saving, or if you still have work to do to bring your spending under control, stay within your budget, and continue to work to eliminate your debt.  What we suggest is that as you pay off a debt, take the money you were using to pay that debt and apply it to another debt, and continue this process until all of your debt is eliminated.  The trick is not to incur any additional debt while you are doing this.

 

That is where saving and having an emergency fund becomes so important.  There will be unexpected things that happen in your life that require money.  If you are not prepared those things may take money away from bills that you are paying, or may require you to have to take on additional debt.  This is a vicious cycle that seems to repeat itself and keep many people from making any progress.  That is where better planning and exercising self-control is important.  But having an emergency fund helps eliminate this problem or at least reduce the impact.

 

If you are at a level where you have already begun saving, we applaud you and your efforts.  We encourage you to continue to do so.  

 

Most experts recommend having at least 3 to 6 months living expenses in your emergency fund.  This should be a separate savings account from any other savings that you have.  Although some reading this may be in a financial position where you think this is impossible for you to do, it is an achievable goal.  

 

I was listening to the radio a few months ago and heard about a fantastic way for people who have very little money to set aside to save can save $1,378 in a year.  Then, this process may be repeated over and over again, or modified to increase the amounts and save more.  The idea is to get in the habit of saving.  To convince yourself that you can save.

 

I did some research after hearing about this saving method and discovered an outstanding blogger, Lisa Bedford, and her blog, The Survival Mom – http://thesurvivalmom.com/. Monica shared information on her blog about an interesting saving method known as the 52 Week Challenge.  

 

The way it works is that you start with $1 on week one.  Then you add a dollar and save $2 on week two, and continue adding a dollar each week until you reach week 52 and save $52, which is the most you will save in any week.  This makes saving affordable, and allows you to progressively increase your savings with reasonable amounts that even those who are struggling can afford.  You can and will find a way to eliminate spending on some things in order to find the few dollars required to use this plan, and at the end of the year you will have $1,378.

 

Although this is far less than 3 to 6 months of living expenses for most, it is a start and that is what this is all about, developing the habit of saving.  Developing the belief in yourself that you can save.  Making saving a part of your life just like breathing.

 

I recommend setting a goal to save at least $1,000, or in this case, $1,378.  Then set a goal to reach $2,000 next, and continue adding a thousand at a time, unless you can do more, until you have saved 3 to 6 months of living expenses.  This has to be money that you will not touch unless there is a major life issue that can only be taken care of by using some of the money in your emergency fund.  

 

In a perfect world this money would be totally off limits for any use until the goal is reached, and that should be your goal.  But we do not live in a perfect world and things will occur and you may have to use some of the money.  The key is to be committed to avoiding the use of the money in the emergency fund you are building unless it is absolutely necessary, and then working to replace what was removed in addition to what you are currently saving as quickly as possible.

 

There are three very good articles about saving in our “Must Read” section at the end of this post.  We strongly recommend that you read those for more detailed information about saving and building an emergency fund.

 

Also, if you have not reviewed the Thirty Steps to Financial Wellness program at the Money Management International website and have included this in your routine to improve your personal money management, make sure that you do.  There is no better time than now, since this is Financial Literacy Month. Have a wonderful day.   

 

If you have questions or need help we are just an email away.  Send your questions to Info@KnowYourMoneyGlobal.com  

 

We Would Like To Hear From You.  Are There Any Brave Souls Out There Willing To Share? If you would like to share with our readers how “bad” spending habits have affected you, anonymously or otherwise, for our upcoming special, “Confessions Of Spendaholics,” please send your experience to comments@knowyourmoneyglobal.com.  

 

 

Must Reads For Savers:

Establish an Emergency Savings Account

http://tinyurl.com/kymemergencysavings  

 

Weekly Savings Plan:  How to Save Money Even If You’re Broke

http://www.monicaonmoney.com/how-to-save-money-even-if-youre-broke/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MonicaOnMoney+%28Monica+on+Money%29

 

10 Ways to Save Money When You Make the Minimum Wage

http://blog.credit.com/2014/03/10-ways-to-save-money-when-you-make-minimum-wage-79066/  

 

Follow us on Twitter for more information about personal money management https://twitter.com/Kn0wY0urM0ney

 

Copyright © 2014 CWR Media – All Rights Reserved  

 

Have financial literacy efforts in America been successful?

Guest Contributor

Lionel Shipman Owner - Shipman Consulting

Lionel Shipman
Owner – Shipman Consulting

Lionel Shipman is the owner of Shipman Consulting, a personal and business finance-consulting firm specializing in helping individuals and businesses improve their financial outlooks. The primary focus of the firm is facilitating seminars and classes to educate, motivate, and empower people to take charge of their financial lives. The firm also offers one-on-one consulting services.

Please visit the firm’s website for information at WWW.ShipmanConsulting.Com.

Email address: Contact@ShipmanConsulting.Com ; Twitter: @LShipmanSC

 

 

We’re Celebrating Financial Literacy Month

Front view portrait of four business executives jumping with arms raised

 

Know Your Money
Tuesday – April 22, 2014

Knowing Your Personal Finances
Have Financial Literacy Efforts In America Been Successful?
By Guest Contributor
Lionel Shipman

Seeing that this month is Financial Literacy month, I thought I would repost this article with some updated information. A couple of years ago, I was asked to address a financial question that has affected many consumers across America. I thought this question was very interesting and wanted to share it with my readers. Below, I have paraphrased the question, along with my response, and provided some updated information.

Have financial literacy efforts in America been successful?

My response: It depends on how one would measure success versus failure. Regarding financial literacy, I believe failure can be measured by the number of consumers who are enduring the consequences of bad decisions. Success can be measured by the number of bad decision-makers changing their ways in a positive direction and applying some basic money skills with financial transactions. With the past economic downturn and the continued after shocks, many consumers have been enduring the consequences of financial mismanagement and ill-informed or uninformed decision making. As a result of these decisions, a large number of people faced and some continue to face foreclosures and bankruptcies among other financial heartaches. A lot of these people made bad financial decisions, whether the decision was the refusal to live on a budget, the steady accumulation of debt or signing loan documents without fully understanding the terms and conditions of the obligation. Even today, according to an article by Fortune Magazine dated February 18, 2014, consumers are taking on significantly more debt than they have in recent years.

However, there are a number of people who did not succumb to the easy access of credit and refused to enter into an obligation with a bank or financial institution, even though they understood the terms and conditions. Some of these people have been financially bruised in the past and now their future decisions are well thought out because of their financial knowledge and experience. Even though there are people who will never learn the “financial” lesson, some have not only learned the financial lesson, but they are teaching others how to manage their finances soundly. Sadly, there were a number of financially savvy people, who made bad decisions and unfortunately, it cost them greatly. They acquired the financial education and experience but somehow did not apply it to their financial decisions. As the old adage states, the bigger they are the harder they fall. Unfortunately, the fall greatly impacted their financial well-being, which in turn affected many other people.

There are some hindrances that could affect the measurement of successful efforts of financial literacy such as the scarcity of financial education in certain instances and accessibility of financial education. There are a number of financial programs that aim to teach and instruct people with their personal finances. But, many people are not able to attend those programs for a variety of reasons and many are not aware that the programs even exist. Also, some people find no practical value in the financial programs. It does not take a college graduate to learn the basics of money management. Educating oneself regarding money and money management is open to everyone. But, every individual must make the decision to learn and must be willing to learn.

There are many outlets from radio programs and television shows to seminars and books that emphasize the importance of financial education with topics ranging from basic money management to investing. However, some people are ignorant (unlearned) of the importance of financial education and some just blatantly refuse to learn even when it is at their fingertips. There are people who would rather spend their money on entertainment or personal things as opposed to establishing an emergency account, savings account or retirement account. Some people are more concerned with looking good, driving well, and living large as opposed to utilizing a budget and becoming debt free. I believe if more financial education was offered to the masses at an earlier age, like other things in life, people would operate their financial lives more efficiently and maybe the economic downturn would not have been so devastating.

I have often stated that the economic downturn was brought on by consumers, companies and government. (1) There were a number of consumers who were getting into loans or establishing credit without fully understanding the terms and conditions. (2) Then, there were a number of companies who were marketing credit products to the masses as opposed to those who really understood the terms and conditions and had the income and cash flow to support debt obligations. (3) And lastly, some government agencies failed to properly regulate credit/lending products of various financial institutions. These agencies also failed in properly managing complex financial transactions of various financial institutions. Therefore, all three can share some responsibility of the economic downturn. Unfortunately, consumers paid the biggest price.

Going forward, consumers need to be better prepared and informed when making financial decisions. Consumers need to be more educated regarding money and money management. Financial responsibility should not lie with companies and government alone. Consumers must take the initiative in educating themselves by enrolling into financial classes and/or attend financial seminars to increase their knowledge and understanding of money and money management. Consumers should spend time reading financial magazines, newspapers and articles. Then, they must apply that knowledge and understanding to their financial lives. Knowledge is power. But, applied knowledge is powerful. If you do not understand something, ask questions until you do. Then, if you still feel uncomfortable, consider walking away. There are always other options available. Every day is an opportunity.

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