The Stuff They Didn't Teach You in SchoolAn Introduction to Financial Literacy

4/24/2023 - By Pierce Broscious, CFP

Here’s a list of things you may have learned in school:

  • The mitochondria is the powerhouse of the cell. 
  • y = mx + b 

Although this curriculum had a purpose in feeding our curiosity and guiding us toward a career path, I’m sure most of us today wouldn’t find this information helpful. Instead, we’re thrust into adulthood without the slightest idea of how to: 

  • Balance a budget
  • File your taxes
  • Invest your savings

These topics center around the broader category of financial literacy, which is generally not taught in the public school system. And if you feel unsure about your financial knowledge, you’re not alone. A study from the National Financial Educators Council found that in 2022, the average estimated cost of financial illiteracy per U.S. adult was $1,819. This is how much each individual estimated they had lost in 2022 as a result of making poor financial decisions. Charges such as credit card interest, overdraft fees and luxury big-ticket items were among the top contributors to that cost.

What is Financial Literacy?

Simply put, financial literacy can be defined as having the knowledge necessary to manage your financial responsibilities prudently and effectively. Keep in mind that this is for your financial responsibilities. Not everyone needs to have a CFO level of financial comprehension. However, you should understand enough to sufficiently accomplish what your personal responsibilities require or likely could require.

How Can I Develop My Financial Literacy? 

With a multitude of content out there to choose from, and no planned class schedule, it can be tough to know where to start. Here are a few notable resources you can leverage to start gaining financial literacy: 

1. Financial Institution Resources 

Credit card companies and banks often offer free resources for individuals interested in learning more about personal finance. Try Google searching “[Your institution’s name] Personal Finance resources”- you may be surprised to see how many links come up. We at Saltmarsh Financial Advisors have curated great resources on our website, including our Foundations of Financial Stability webinar. 

2. Employer Retirement Plan Resources 

If you are employed and your employer offers a retirement plan like a 401(k), ask about their resources for financial education or explore their website. Plan sponsors will generally offer educational resources to address personal finance topics. They may provide articles and/or calculators that could help to provide guidance and projections.

3. “Get Your Hands Dirty”  

Often, the best education comes from experience. Try building a budget or a balance sheet of your current assets and liabilities. This will help you get a better understanding of your current situation. If you’re not sure where to start, download our budget worksheet or check out our blog posts about creating a budget and starting a savings strategy

4. Explore!

Google search particular topics of interest to you! You will likely find many blog posts and online articles. NerdWallet is well known for providing informative articles on personal finance topics. However, when searching on the internet, be aware of misinformation – social media is notorious for this. Ensure you are obtaining information from a credible source. 

How can I take it a step further?

At Saltmarsh Financial Advisors, we help provide answers to the following questions:

  • Should I prioritize paying off debt or saving towards retirement?
  • Am I paying too much in certain areas of my budget?  
  • Which investments should I choose?
  • How do I effectively apply my income towards my goals?

We primarily work with individuals with investable assets of $500,000 or more, but we do offer separate engagements for those looking for a planning-only type of arrangement. If you or someone you know may benefit from speaking with us, please reach out to us.

About the Author | Pierce Broscious, CFP®

Pierce is an associate financial advisor for Saltmarsh Financial Advisors, LLC, an affiliate of Saltmarsh, Cleaveland & Gund. He is responsible for the research and preparation of investment proposals, portfolio rebalancing and construction of financial plans. He also assists in the creation and maintenance of client files and communications. Pierce previously worked in data analytics for a global payments consulting firm.

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