Every year on August 14, National Financial Awareness Day is observed. It is a day dedicated to laying the groundwork for your financial future and building financial stability. When you become more aware of your finances and your specific financial situation, you are in a better place to reach your financial goals.
In a recent study on financial literacy conducted on behalf of the National Foundation for Credit Counseling, findings revealed that a slight majority of American adults (57%) give themselves high marks for their personal finance knowledge. Even more interesting is that thirteen percent of the over 2,000 participants indicated they are not sure they fully comprehend their financial situation.
Not surprisingly, this confusion and anxiety are more common in younger people. They have come of age amid greater economic and financial doubt and uncertainty than their parents. Many people find financial literacy overwhelming, and sometimes, it may even feel out of reach.
National Financial Awareness Day provides an important reminder that it is never too early or late to start the process of becoming more financially aware and a better steward of your money.
Although the origins of this national day are unknown, it aims to introduce and build smart financial practices that will strengthen an individual’s financial situation.
To stay up to date on your cash flow, deposits and withdrawals, you can set up text alerts through your bank via their online banking platform. For example, seeing your money come in and out may help you know if you are being charged for a service you no longer use or spend too much in a specific area, like take out or delivery. In most cases, you can set an alert by transaction size (i.e., $75 or more) or a low balance alert to remind yourself when your funds are insufficient. Establishing these alerts can make you more financially attune to your money.
Take a moment and review your savings accounts. As you do this, ask yourself some questions:
If you do not have an emergency fund and have not started saving for your future, it is time to put a plan together. A good rule of thumb is to have three to six months’ worth of saving set aside in your emergency fund.
Sometimes, things happen that are out of our control. Therefore, it is crucial to be as financially prepared as possible.
Summer is the time of year that we typically travel to see family and friends and explore new places. It is easy to get caught up in “vacation mode” and spend more than you would if you were at home. One way to avoid this spending track is to set a vacation budget. Determine how much you want to spend on food, beverages, travel, lodging, fun, entertainment, etc., and try setting a daily spending allowance. Then, if you happen to go over one day, make sure to tone down your spending the following day.
To stay accountable to your budget - once the vacation ends, review your calendar and compare it with your credit card and bank statements to see how much you actually spent versus what you budgeted.
It seems like a simple concept – to live within your means. However, it is easy to get caught up in lifestyle envy and live beyond your means. For example, if you spend more money than you bring in, you may not meet the financial goals you set. And, even more, concerning is finding yourself in deeper trouble by not having adequate funds to pay bills, mortgage/rent, or afford your basics needs.
If you are unsure if you live beyond your means, take a look at your account balances. Are they going up or conversely struggling to stay above water? If you are having a difficult time, review the places where you are spending money. Next, track and evaluate your expenses based on what is necessary (i.e., food, shelter, bills) and discretionary spending. Finally, create a budget based on what is essential and cut what isn’t required.
Remember, earning more income doesn’t make it easier to live within your means. In many cases, it can make it more challenging to track where you are leaking money.
Periodically reviewing your finances and evaluating your decisions is crucial in creating healthy behaviors and planning for your financial future. If you need help getting control of your finances and planning for the future, you can connect with one of our financial planners. Spaugh Dameron Tenny helps physicians and dentists across the U.S. with comprehensive financial planning services.
Shane Tenny is the managing partner of Spaugh Dameron Tenny. Along with hosting the Prosperous Doc® podcast, Shane has a true passion for behavioral finance, helping clients and audiences understand how to develop successful strategies based on their unique temperaments. An accomplished and highly engaging speaker, Shane is regularly interviewed for television and podcasts, is actively involved in the Financial Planning Association®, and contributes to industry advisory boards.
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