Money is a prickly topic in a lot of households however we should all be financially aware and know exactly what dollar is going where and why. Money is something that affects you in one way or another whether you know it or not. This is why improving your financial knowledge is vital.
My husband and I have always been honest and open about what our financial goals are and as we have combined bank accounts this is exactly how it should be. When we were younger we used to get paid weekly and we would live like kings. For a day. Then our bills would be debited out of our accounts and we would be left living like a pauper, with no idea where our money went. We thought we understood what it meant to be independent and pay our own way however we lacked the knowledge and experience to manage our finances efficiently. As weeks turned into months; our budget (or lack thereof) became evident and the reality of what everyday living actually cost meant something had to change. We did some research, discussed our options and made a plan.
Many women however don’t like to bring up the money conversation as it can be seen as unladylike, impolite or just plain naggy. When in actual fact this old fashioned concept is preventing them from ensuring their family’s financial security and their own personal economic knowledge.
Improve Financial Literacy
It is not just women and those in relationships though that need some assistance with improving financial knowledge. There are several characteristics shared amongst those in Australia who are least financially literate. According to the Commonwealth Bank Foundation’s ‘Improving Financial Literacy: Benefits for all Australians’ report, these tend to be those who were hit hardest and suffered job losses and reductions in working hours during the Global Financial Crisis. And yet it is those same people who were least equipped to deal with the financial stress as a result of limited savings to assist them during their change in circumstances.
Young people aged 16-25 and those earning a low income of less than $30,000 tend to be the least financially knowledgeable members of the community. However they are not alone. Those that indicated ‘any high school’ was their highest level of education made up large percentage of those needing to improve financial literacy and as you would expect those who are unemployed or studying.
It is so important that everyone is financially literate and aware of their monetary situation. Not just those I mentioned above but everyone; single women, single men, husbands and wives, mothers, fathers, brothers, sisters, adults and teens. Everyone! It is crucial we have important discussions about money with our partners or family members so there is a clear understanding of what insurances are in place should anything happen to you.
Spouses often make these decisions together but it is a topic that should be reassessed regularly as situations can change. This will also ensure you and your family are still getting the protection and cover you need. Determining how much you need to be covered for depends on a variety of things; how much debt you have (house, credit cards, etc.), income replacement and even future obligations (schooling fees for dependants).
Income insurance may also be of interest because if you were to be injured and no longer had an income to support your family. This change in circumstance could potentially cause a lot of strain and unnecessary stress in an already difficult time.
This does not in any way mean that everyone must have life and income insurance. It simply means that it should be assessed on your personal financial situation. If you have no dependants and your assets outweigh your debts than you may not require it at all. Seek financial advice if you are unsure or would like more information.
Another thing that should be discussed and actioned is your Will Kit and Power of Attorney. This is for you personally and your families piece of mind. The affects of not keeping your Will up to date is often underestimated. If you have not got a Will Kit or need to update it you can purchase one online at Australian Will Kits.
Knowing what bills need to paid and when, how much your day to day living expenses and budgets is, what your savings goals are and how you are going to achieve them is just a small portion of your financial obligations. At the end of the day being financially literate will be a long term benefit for not only you but also your family.
What additional tips would you give others looking to improve their financial knowledge?