Get Fluent in Finance in 2016

December 22, 2015

Connect Member

Founder and CEO of GoldBean: Investing for Beginners.

hellogoldbean.com

As we head into the holiday season and the close of another year, many people are thinking about their goals and wishes for the future. One popular New Year’s resolution people make is to learn and expand language skills. But instead of taking on Mandarin or Spanish, why not learn the fundamentals of finance?

Despite all of the websites and “experts,” there remains a shortage of simple, practical tools for building a financial knowledge base and gaining the confidence to take the necessary steps toward financial empowerment. If you disagree, consider this: Every other household in the U.S. has an average of $15,000 in credit card debt. It’s a staggering fact, but it doesn’t have to be one you live up to.

Regardless of where you are on your financial journey, here are three practical things you can do to get fluent in finance in 2016.

First, shake off your New Year credit card hangover.

Everyone can benefit from this one credit card trick — set up a direct deposit to pay your card weekly, especially if you know approximately how much you spend each month. Your credit score can be dinged if you get too close to your limit, and ratings agencies like when you spend 30 percent or less of your available credit. So, by paying bits regularly, you’ll be more likely to stay in the safe zone. And when you’re trying to pay down your credit card debt, paying it every week can feel more manageable than a large payment once a month.

Next, make a commitment to learning.
Add new titles to your media consumption that feel like a stretch to your current level of understanding, like finance magazines or The Wall Street Journal, make this the year of figuring out what all the foggy words mean. (Investopedia is a great resource for this.) Don’t be afraid to ask questions about money. Afterall, the more we all normalize this conversation, the less guilt and shame people will have about raising their hands for help.

If you feel overwhelmed by this undertaking, consider how much time, energy, and money you devote to keeping yourself physically healthy through diet and exercise. Your physical health is important enough to put in the work, and so is your financial health. If you spend even a fraction of that time on your financial fluency, you’ll make great progress toward empowerment.

Lastly, focus on growth.
You work hard for your money. Everyone does. But you don’t make it just to spend it — you make it to create the life you want for yourself. Putting your money to work for you through investing is fundamental to achieving that goal.

If you waited until you knew everything about investing, you would never start. So, even if you’re not in a position to start investing today, start a virtual portfolio and build your money muscles while you build up your actual funds. And while you’re at it, considering making a commitment to an ongoing direct deposit so you can gradually buy into your portfolio.

Can you say "buy-lingual"?
So, what happens once you're financially fluent? You can calculate what professional financial help is really costing you. You’ll find that managing money isn’t that hard or complicated — it’s just made to appear that way by the people and companies that profit from your lack of confidence.

Over time, as your financial life becomes more complicated, it may make sense to bring the experts back in. But make sure when that time comes that you have the confidence to negotiate, ask questions, and hold your advisors accountable.

When you get overwhelmed, remember that everyone has to start somewhere — so what will your starting point be?

Jane Barratt is the founder of hellogoldbean.com and a member of the DailyWorth Connect program. Read more about the program here.

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