Knowing how to manage money by budgeting, saving, and investing is vital to being financially successful. Even things as seemingly easy as setting up a bank account, applying for financial aid, and building credit require knowledge of money management. However, according to a 2018 study by FINRA, only 43 percent of Americans surveyed consider themselves good at “dealing with day-to-day financial matters, such as checking accounts, credit and debit cards, and tracking expenses.”
Instead of waiting for the New Year to make resolutions about spending habits and learn more about managing your money, why not use a day that is dedicated to financial awareness? National Financial Awareness Day, which takes place on August 14 every year, is a time to consider financial decisions and plan for a more financially successful future.
What Does it Mean to Be Financially Aware?
Financial awareness is both a mindset and a strategy that ensures you’re making, spending, saving, and investing money in a way that maximizes your chance of success.
Elements of financial awareness include the following:
- Familiarity with ways to save money
- Full understanding of your income and spending habits
- Protecting the money you have saved
- Knowing when and how to borrow money
- Insight on how to make your money go further
- Knowledge of financial instruments (stocks, bonds, funds, cryptocurrency) and how to use them
- Creating a monthly budget and long-term investment plan
What is National Financial Awareness Day?
The origins of Financial Awareness Day in the United States are unknown, although it was first officially celebrated in 2019. The day is dedicated to developing the financial principles and practices that can build a solid financial future from now through retirement. It celebrates implementing sound investment practices, so you can make your money work for you, spend less time working, and have more time to enjoy living your life. The holiday also helps demystify finances by teaching people that financial matters can be straightforward and manageable—not overwhelming and stressful.
How Do I Celebrate National Financial Awareness Day?
No matter where your finances stand and the stage of life you are in, it is never too late to learn sound principles that will help you plan for your financial future. These include making small changes in daily habits, saving whenever possible, and conducting responsible investment processes.
To start your National Financial Awareness Day 2022 celebration, learn about how to get your finances in order. For example, the For Dummies series has many easy-to-understand books for financial beginners, such as Personal Finance for Dummies, Managing Your Money All-in-One for Dummies, Stock Investing for Dummies, and Cryptocurrency All-in-One for Dummies. You can also speak to a financial advisor, take a college class online or in person, or join an investment or financial empowerment club to learn about personal finance items to review.
Once you learn the basics of financial awareness, try to do something to protect your financial future and increase your stability now. Here are some ideas:
Save money: Open a savings account and commit to putting away a small amount of money in savings every week and never touching it. Many financial experts suggest putting at least 20 percent of your income into savings.
Spend less: Make small changes to your spending habits to save money, such as drinking water instead of soft drinks or alcohol when you eat out, walking or biking instead of taking a car, or turning up the thermostat a degree or two to save on energy costs.
Improve your credit: Review your credit reports (tip: use soft inquiries, so you don’t accidentally ding your credit score). Make sure you pay off your credit card each month. Avoid late payments by tracking your bills and setting up automatic payments or payment reminders. Strive to only use around 30 percent of your credit limit, since that’s a major factor in determining your credit score.
Start investing: National Financial Awareness Day is also a great excuse to start investing. Many apps help you invest, even with just mere pocket change. It’s best to start with secure, low-risk investments and slowly build your way to higher-risk investments.
Budget: Create a home maintenance budget for the year. You can make a budgeting spreadsheet or download one of the many money-saving apps for budgeting. Many of these apps are user-friendly and highly intuitive, meaning you can learn more about budgeting as you go.
Create an emergency fund: Medical bills, job loss, or a sick pet can be expensive to cover. Instead of choosing between going into debt or not paying for something you need, put money into an emergency fund that will help protect your finances if anything unexpected occurs in the future.
Build your retirement fund: Most retirement experts recommend contributing 10 to 15 percent of income towards your 401(k) or another retirement fund. If that’s too big of a commitment for your current income, start contributing as much as you can and slowly work your way up to that goal.
How Do I Protect My Finances with a Home Warranty?
If you are a homeowner, one of the best things you can do to celebrate National Finance Day is to sign up for a home warranty plan. A home warranty protects your budget when covered parts of your home systems and appliances break down from everyday use. These key household items will eventually fail, so it’s important to be prepared when they do. Put some predictability back in your budget with a home warranty. Check out our appliance repair cost guide to get an idea of how much it will cost to repair certain appliances without home warranty coverage.
AHS offers Appliances Warranties and protection plans.
With comprehensive coverage and flexible pricing and plans, a home warranty from American Home Shield® means peace of mind and budget protection. We can help you control your finances—it just starts with a plan. Our plans cover parts of up to 23 home systems and appliances. If the covered item cannot be repaired, we’ll replace it, subject to the limitations and exclusions of your contract. The ShieldPlatinum™ plan offers ultimate budget protection: It not only covers 23 systems and appliances, but it also includes roof leak repair, one free pre-season HVAC tune-up annually, unlimited A/C refrigerant, double the appliance limits, and coverage for modifications, code violations, and permits.
AHS offers Roof Leak Repair Coverage service.
National Financial Awareness Day is the perfect time to improve your financial literacy. Take this time to reflect on your finances, educate yourself, and make informed decisions to pave the way for a successful financial future. Read more budgeting tips on our blog.
AHS assumes no responsibility, and specifically disclaims all liability, for your use of any and all information contained herein.