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Did you know that April is National Financial Literacy Month?  This month-long campaign, recognized by Congress in 2004, is designed to highlight the importance of financial literacy and teach people of all ages how to manage their money wisely.

According to a survey conducted by the Financial Industry Regulatory Authority (FINRA) in July of 2016, most Americans could benefit from opportunities to improve their financial awareness.  The study, which polled more than 25,000 American adults who represented the national population in terms of age, gender, ethnicity and education, showed that 63 percent of Americans are unable to correctly answer more than three out of five questions about basic economics and finance, while 60 percent are spending more than they earn or are just barely breaking even.  Only 40 percent of those surveyed spend less than they earn.  The study also revealed that 50 percent of Americans don’t have funds set aside to cover expenses for three months – a general rule of thumb to follow in the event of an unexpected emergency such as sickness or job loss.

Here are 3 tips that can help you improve your own financial literacy.

          1. Set a budget – and stick to it.  Of course, individual budgets are influenced by variables such as what state you live in and what tax bracket you fall into, but a general guideline for any American is the 50/30/20 rule.  The ratio breaks down like this: 

Spend 50% of your take-home pay on “fixed costs” – consistent bills that are roughly the same amount of every month.  This includes things like rent or mortgage, utilities, car payments and cell phone service.

Reserve 30% of your net income towards flexible spending, or disposable income.  This  includes gas and groceries (which are not always consistent cost-wise from month to month), entertainment and hobbies.

Use the remaining 20% of your net income to manage your debt and/or plan ahead.  Think about paying off your credit card, saving for retirement, or building that emergency fund.

          2. Start saving now.  Sometimes it’s hard to think about the future when you’re busy living in the moment.  The consequences of not consistently saving at a regular pace may not be felt until much later in life, when you send your kids off to college or start approaching that goal retirement age.  One of the easiest ways to save at a consistent pace is to automatically pay yourself a set amount from each paycheck.  That way, the money is gone out of your budget before you even notice it’s missing.

          3. Set specific financial goals.  It’s never too late to set – or even modify – your financial goals.  Doing this means you have to pay close attention to the first two tips mentioned above.  Once you are in a good place with those, you can focus on your specific financial goals.  The first steps to setting financial goals are securing a steady source of income, making sure you have financial reserves, and protecting yourself and your family from the unexpected by buying the right insurance for life, health, disability income and possessions. 

While all three tips mentioned above are important, when it comes to financial literacy it’s all about balance.  Balancing your life by evening out your spending (and saving) helps to ensure that you will enjoy financial stability – even in unforeseen circumstances – well into your retirement years.

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