By Sonya Sellmeyer, Consumer Advocacy Officer for the Iowa Insurance Division
Financial literacy is the ability to understand and apply financial management skills, and April is the month dedicated to teaching this important concept, especially to our youth. During this difficult and challenging time, the meaning of financial literacy may have taken on a broader focus to include preparedness and protection as they relate to your finances.
Having a disaster plan not only includes having toilet paper and hand sanitizer but also includes having a plan for your finances. Do you have an emergency fund? If not, start one and work on a plan to maintain it. What about a budget? Your expenses may have changed during the pandemic, and your budget may need adjustments. Prioritize your expenses and protect your credit score. If you are having trouble paying your bills, call your creditor and explain your situation. Some credit card issuers and banks may suspend payments and interest, for a limited period of time.
After reviewing your emergency fund and budget, look at the rest of your finances and their financial wellness. Remember the buy and hold strategy may be your best plan when the market is unstable. This may be a good time to review your portfolio and minimize risk. Ensure your investments are using the concept of diversification by spreading your risk over several financial interests, such as within a mutual fund or target-date fund, and not invested in only one company. If you have concerns about your accounts, call your licensed financial professional. Keep calm, review your goals, make changes when necessary, and stay informed with accurate information.
While many are educating at home, spend time with your children teaching them about budgeting and saving. For K-12 students, Jump$tart has plenty of free resources by grade level and Everfi is offering free online financial learning in over 20 no cost digital courses in a variety of topics. And while we have the time, play Monopoly or Payday to teach your kids money skills.
Financial literacy also includes being educated about consumer and financial scams. In times of fear and uncertainty, con artists can play on our emotions. Imposter scams have increased so beware of callers who claim to be from a healthcare company, provider, or government entity. Remember to go back to the basics. Don’t answer calls or click on links in a text message or email from someone you don’t know.
Ben Franklin said “an Investment in Knowledge is the best interest” so during this difficult time don’t forget to think about your family's financial literacy and what that means. Review your financial plan and stick with your long term goals. While we are teaching at home, spend time educating your children about finances. And as always be aware of scams that prey on your fears during this turbulent period to stay well in your financial well being.