Retirement Services

Elevate Your Financial Literacy by Balancing Dollar Priorities: 5 Simple Steps

As Financial Literacy Month comes to a close, it's the perfect time to renew your commitment to financial well-being.

What does it mean to be financially literate? Simply put, it's having the knowledge and skills to manage your finances effectively. From budgeting to making informed decisions about your money, financial literacy empowers you to navigate your financial journey with confidence.

Are you confident in your financial literacy?

If you answered no, you are not alone. Recent surveys indicate that 73% of Americans are stressed about their finances, with inflation being a major concern for many.[1]

Money impacts almost every facet of our lives. How often we work and where we work, what clothes we buy, the amount of heating and cooling we use, and our choices at the grocery store. With rising inflation, the impact of financial decision-making weighs even heavier.

As result, financial stress can take a toll on our emotional, physical, and mental well-being, as well as our work life and relationships.[2] 

If you are feeling overwhelmed and unsure of how to make your next decision, focusing on Dollar Priorities can help. 

To boost your financial literacy and confidence, consider these simple steps:

Dollar Priorities

  1. Budget/cash flow plan: This may sound obvious and repetitive to some – see our past blog posts – but beginning with a budget (or cash flow plan) can help guide your financial decisions. You can liken this to captaining a ship. If you are out at sea, the instruments are working, and the path ahead is clear, the odds of a successful and timely journey are great! On the other hand, if the instruments are not working properly, communications are down, and the path is unclear, the journey ahead may be challenging. Much like plotting a course for a successful journey, having a plan for your money can help you anticipate and navigate life’s uncertainties.

  2. Establishing an Emergency Fund: Once you establish a plan, it is important to have contingencies, which is where an emergency fund comes into focus. What is an emergency fund? These are liquid dollars set aside as a safety net for unexpected expenses. For instance, no one plans for the untimely breakdown of their water heater. With an emergency fund, you may be able to pay for this expense out of pocket rather than go into debt or, worse, take from retirement. In general, aim to have 3-6 months of non-discretionary expenses available in a liquid (accessible) account like checking or savings.

  3. Maximize your employer retirement benefit: Now that you have contingencies in place, see if your workplace retirement plan offers a matching contribution. If so, consider taking advantage because this is essentially free money from your employer that goes towards your retirement. Make sure to contribute at least enough to capture the full match (e.g., if you have a $1 for $1 up to 3% match, contribute 3%).

    If you don’t have matching available, your workplace retirement plans still offer great savings, investing, and tax benefits. Reach out to your retirement plan administrator to learn more about the tax advantages and investments in your plan.

  4. Tackle your debt: Next, if you have debt obligations, develop a strategy to pay them off. Whether it is student loans, credit cards, or a car payment, making debt payments can limit other financial opportunities. Consider a proven debt payoff strategy, like the avalanche or snowball methods, to quickly pay off your debts and set yourself up for long-term success.

  5. Invest in other opportunities: With a strong financial foundation, explore additional savings or investment opportunities aligned with your goals. The options are many, so prioritize what’s most important to you. 

Keep in mind, financial goals have dollar signs. Set clear targets and figure out the savings needed to reach them.

Want to leverage investing? Consider working with an investment professional, or consulting robo-advisor services. If you would like to take it a step further, consult with a CERTIFIED FINANCIAL PLANNER™ (CFP®) who can provide you with comprehensive financial advice and help balance your Dollar Priorities.

If you are feeling financially illiterate, or simply want to improve your overall confidence, follow these steps to build confidence and positively impact your financial future. 

For more financial wellness resources, explore our past blogs here

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[1] CNBC - Majority of Americans feeling financially stressed and living paycheck to paycheck according to CNBC Your Money Survey

[2] Financial Educators Council - Cost of Financial Illiteracy Report 2023

Michael Forney
The Author
Michael Forney

Investment Advisor and Financial Wellness Specialist

Michael is an Investment Advisor and Financial Wellness Specialist focusing on providing employee education and partnering with clients on financial wellness strategies. He possess a depth of knowledge on employer sponsored retirement plans, particularly the 401(k), and has a broad range of financial knowledge on investments, high-level tax benefits of various retirement accounts, and savings strategies. Previously, Michael worked at a top producing advisory firm where he built financial plans for families and businesses as a Financial Planning Specialist.

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