As we kick off financial literacy month, we want to share some frequently asked questions we’ve received from clients and friends and provide actionable answers. As we embark on a new quarter and the spring season, it’s a perfect time for some “spring cleaning” and financial organization. Throughout the month of April, we want to stress the importance of financial literacy and spread the word about financial education and empowerment. We will be sharing questions, answers, and advice we receive in hope to help you all organize and prepare your finances for the rest of the year.
Below you will find some frequently asked questions:
Q: How do I adjust my budget for inflation, and this higher cost of living?
A: With inflation sky-rocketing over the last year, and the Federal Reserve raising interest rates to bring it down, many individuals are needing to adjust their budgets, as the cost of their previous budget is now more expensive. So, let’s start by taking a look at your wants versus your needs…Are you spending money on items you really don’t need? Are there areas of the old budget you can omit? Make sure you are canceling old subscriptions and making sure your cash outflows are not exceeding your inflows.
Q: Is there anything I need to think about with higher interest rates?
A: This is a great question. Given the high interest rate environment we are currently in, there is lots to think about. First and foremost, make sure you are maximizing the interest you are earning on your cash. Don’t park your cash in 0% large money center banks, when you can make close to 4% in FDIC insured high yield savings account. Consider high interest paying vehicles, such as CDs and Treasury Bills/Notes. On the flip side, as it relates to your debt, make sure you know what rates you are paying on your variable rate debt, so that as it increases, you are not letting it get out of hand.
Q: As a new college graduate, where/how do I get started in terms of investing?
A: First and foremost, it’s important to take a step back and establish what your financial goals are. If you are saving up for a new apartment or expenses in the near future, maybe consider building up your emergency fund/savings account. If you want to set yourself up for a solid financial future, you should think about contributing to your retirement, in a 401(k) through your workplace, or a Traditional/Roth IRA if you don’t have a 401k at work. But most importantly, don’t forget about that emergency fund. If the last few years taught us anything, it’s to prepare for the unexpected.
Q: How do I decide which credit card to apply for?
A: Before applying for a credit card and opening lines of credit, make sure you understand the responsibilities involved. When opening a new credit card, you must remember to pay your balances and statements on time in order to keep your credit score in tip top shape. That being said, opening lines of credits are crucial in establishing your credit score, so it’s important to do so. When deciding which credit card to choose, think about your expenses and where most of your dollars go. For example, if you spend most of your money at Amazon, consider purchasing an Amazon credit card that may provide you with cash back or points offers. Or, if you love to travel and dine at restaurants, consider a card that provides you with double points for those activities. Making the most of your credit cards is a great financial literacy tip to start the month.
Implementing these small tips into your everyday financial routine is a great way to get organized and start off on the right foot. For more financial literacy advice and questions, stay tuned for our content and join us for our very special financial literacy event this month, Women, Wine, & Financial Fitness, where we will provide a open and informal space to empower women on their finances, accompanied by guest speaker, Estates and Trusts Attorney, Sarah Broder. Reserve your spot now: https://www.eventbrite.com/e/women-wine-financial-fitness-tickets-608759424827. If you have other questions similar to the ones above, please feel free to send them to us to answer at info@shermanwealth.com. If you would like to directly discuss your questions with us, please book a complimentary meeting here.
