What is Financial Literacy?

‘Financial literacy’ is the ability to comprehend money matters and to manage your money well.

 Why is Financial Literacy important?

People need to have the basics of financial knowledge so that they can manage their money effectively. This ability to intelligently handle money, open a savings and checking account, acquire a home loan or a car loan helps to raise a person’s standard of living and create financial stability in the home. These financial skills and knowledge are empowering; they allow you to:

  • Know when you are not being treated fairly in money matters;
  • Negotiate a lower interest rate on a car or home loan
  • Know where to find better deals on consumer goods
  • Use your checking account to pay your bills less expensively than needing to buy money orders
  • Save money for retirement and your children’s college education
  • Protect your self from scam artists and identity theft
  • And numerous other benefits

 Identity Theft

When someone assumes your name to purchase items without your knowledge or sanction, this is identity theft. To keep you safe:

  • Do NOT give out personal information to strangers on the phone, through the mail or Internet, unless you know who you are dealing with
  • When using an ATM machine or a long distance calling card, make sure no one looks over your shoulder
  • Keep your PIN (personal identification numbers) in a safe place and tell no one what they are
  • Don’t put your social security number on your checks or on any receipts
  • Keep all identification information you carry to a minimum; take only those things you need
  • Create difficult passwords on all your accounts so people can’t guess them
  • Shred all papers that have your name, address and other person information on them before they are thrown in the trash

 Checking Accounts

With a checking account you can write checks for your bills rather than having to drive miles to a store to purchase and pay for a money order. Also, a checking account allows you to have a ‘debit card’ (which acts like a credit card when you're buying something at the store, but it also acts like a check. The debit card automatically withdraws the money directly from your checking account. Additionally, you can withdraw money from your checking account at an ATM Machine with your debit card.)

Think of opening a checking account at a bank where other family members have an account; they can tell you if it’s a good bank to work with and the bank may waive some fees for you. Below is some basic information about opening a checking account:

  • Think of opening a checking account at a bank where other family members have an account; they can tell you if it’s a good bank to work with and the bank may be able to give you a family discount and waive some fees for you.
  • Some checking accounts are FREE if you keep a certain balance in the account every month
  • Ask about the bank’s ATM fees, how much they are for each transaction. The lower the fees the better. Also, see if your bank has an agreement with other banks, so that you don’t get a high charge for using other banks’ ATM Machines.
  • Don’t write more checks than you have money in your checking account! This means you must always know exactly how much money you’ve deposited in your account and how much you’ve spent already in checks. A “Bounced” check is one that is returned to your bank for “insufficient funds” by the store. In other words, you wrote a check for an amount that’s more than you have in your checking account. A “Bounced“ check can cost you $20 or $30 for each check that you can’t cover.
  • Consider having your government and employer’s checks “direct deposited” into your checking account. The money appears in your account and you don’t have to drive somewhere to cash it
  • Consider having your monthly utility bills drawn directly from the checking account to safe on postage, gas and time
  • Benefits of having a checking account:
  1. A checking account allows the bank and you to keep track of everything you’ve purchased
  2. It is cheaper than using an money order for your bills (if you use the account wisely – no “bounced” checks!)
  3. No long waiting in line somewhere to cash your checks (from your employer or government) or to pay bills
  4. You create a credit history which raises your ‘credit score’, thereby getting lower interest rates on vehicles you purchase