Tips for Financial Literacy Month
A lack of basic financial literacy cost the average American $1,230, in 2018, according to the National Financial Educator Council.
In honor of Financial Literacy Month, here are a few tips that may help you avoid the most common financial pitfalls.
- Consider limiting your personal debt and staying current with your repayments
The average American has $38,000 in personal debt, excluding home mortgages. While some form of personal debt may be unavoidable, it’s important to try and stay current on your payments.
Missing a payment – or even using too much of your credit – can diminish your credit score, decrease your available credit, and result in higher interest rates, all of which could cost you more in the long term.
- Make a budget – and stick to it
Having a budget can help you make sure you are only spending what you can afford.
One popular budgeting strategy is the 50/30/20 rule. Start by calculating your after-tax income, and allot:
- 50% of your income for “needs,” such as groceries and utilities;
- 30% for “wants,” such as dining out; and
- 20% for future savings.
Formulating and sticking to a budget can help you meet your basic necessities, indulge in a few splurges, and still save for your future.
- Understand the value of compound interest
“Compound interest is the greatest invention in human history.”
This quote is commonly misattributed to Albert Einstein, but you don’t have to be a genius to see that compound interest – basically interest on interest – is a powerful tool.
When you invest in an interest-earning account, you earn a percentage of your balance back in interest. Since this interest is added back into your account, you’ll start earning interest on the initial interest, and then interest on that interest, and then interest on all of that interest… Over time, this all really adds up.
The best way to take advantage of compound interest is to save early and often.
You can calculate just how much compound interest might be able to help you save for your retirement by using Investor.gov, a website operated by the U.S. Securities and Exchange Commission (SEC).
Saving for the future can be daunting, but there are many instruments available to help you.
Two of the most common are 401(k)s and IRAs.
A 401(k) – or 403(b) – is an employer-sponsored, tax-deferred retirement savings account. One of the benefits of a 401(k) is that your employer may match your contribution; and eligibility is not limited by income.
An IRA (or Individual Retirement Account) can be established by an individual or an employer. There are two main types: a traditional IRA and a Roth IRA. You can learn more about which one might be best for you here. Contributing to an IRA account may reduce your taxable income.
When you open a 401(k) or IRA with Green Century, you can save for the future without compromising your values.
Learn more about opening a Green Century account here.
You should carefully consider the Funds’ investment objectives, risks, charges, and expenses before investing. To obtain a Prospectus that contains this and other information about the Funds please click here, email info@greencentury.com, or call 1-800-934-7336. Please read the Prospectus carefully before investing.
Stocks will fluctuate in response to factors that may affect a single company, industry, sector, country, region or the market as a whole and may perform worse than the market. Foreign securities are subject to additional risks such as currency fluctuations, regional economic or political conditions, differences in accounting methods, and other unique risks compared to investing in securities of U.S. issuers. Bonds are subject to risks including interest rate, credit, and inflation. A sustainable investment strategy which incorporates environmental, social and governance criteria may result in lower or higher returns than an investment strategy that does not include such criteria.
This information has been prepared from sources believed to be reliable. The views expressed are as of the date of this writing and are those of the Advisor to the Funds.
The Green Century Funds are distributed by UMB Distribution Services, LLC. 235 W Galena Street, Milwaukee, WI 53212. 4/19
