In an effort to bring attention to the importance of teaching Americans, especially children, healthy financial habits, the U.S. Senate passed a resolution in 2003 designating April as Financial Literacy Month. The goal is to bring awareness to and teach the significance of financial literacy in our lives and help people understand their relationship with money. Many people grow up without being taught simple things like how to effectively budget, how to save and plan for retirement, the importance of managing debt, or how to invest in the stock market. While these concepts may seem simple, often, if one is not shown the first steps, it is difficult to take action.

Unfortunately, in spite of having endless information at our fingertips, many people, especially those belonging to and after the Millennial generations, are unprepared should they encounter a financial crisis. This month, I’d like to highlight some of the skills and components that help build financial literacy. As with most things, the earlier you start down the path of financial education, the better off you will be.

Budgeting

Budgeting might seem obvious, but knowing how to create and maintain even a simple budget is the first step to understanding your money. It helps you see how much you have and where it’s going. List your expenses, then list your income. Seeing where your money comes from and where it is going is crucial. If your outgoing money is more than your income, you need to make adjustments, otherwise you will become trapped in debt.

Saving

Saving money is a learned skill. It takes self-control, mindfulness, and practice. Understanding the importance of paying yourself first is one of the first steps to developing a good relationship with your money. Having an emergency fund that can cover three months’ expenses will protect you from debt and further money problems should something unexpected or problematic arise.

Investing

When you invest your money, you’re making your money work for you. There are many ways to invest your money. Many employers offer 401k options, but you can invest your money independently as well through mutual funds, ETFs, REITs, money market funds, etc. When investing in the stock market it is helpful to use a professional. However, often many chose to go it alone by using a digital platform. It will take research and a little experience to learn which investments are right for you and what risks your investments are exposed to.

Debt

The best way to handle debt is to never get into debt in the first place. However, that’s not always possible. Some things, usually, require debt, like purchasing a car, a house, or paying for higher education. However, when it comes to the day to day wants and needs, it’s important to set money aside. A good principle is to never go into debt for a liability. If you’re going to use credit, use it to invest in an asset. Student loans are an investment in education, which is something that you carry with you throughout your life; enhancing it and leading to greater opportunities. Therefore, it is an asset. On the other hand things like a vacation or even a box of donuts, (either will be gone within a few days) once the experience is over it no longer serves you. Those things become liabilities if purchased with credit. The goal is to keep your liabilities as close to zero as possible.

Your financial goals should include striving to develop skills and gaining knowledge that will allow you to make informed and effective decisions. This process is a lifelong journey. Education is the key to success when it comes to your money. If there is an area of finance that you don’t understand, embrace it and learn all that you can. Find trusted resources available online or a trusted financial expert to support you in your efforts.