Financial Literacy The Key to Excellent Financial Health

A recent study revealed that two-thirds of Americans are financially illiterate. Financial literacy revolves around being informed about money and building a solid capacity to be in charge of finances in each area of your life.

Insufficient knowledge about money is the main reason why most people make wrong money decisions. Normally, it’s also the cause of bad financial habits that are detrimental to a healthy financial health. Financial knowledge helps you not only live within your means but also plan for the future.

With a rapidly evolving economy, it’s your responsibility to learn more about money. There are numerous ways to improve your knowledge and this article will explore some actionable approaches.

Take action today

Money is a broad subject and you won’t learn and master in a few minutes. Taking a more targeted approach will be a strategic move in attaining mastery in the long run. With topics ranging from budgets, credit cards, insurance, emergency funds, retirement, and taxes you can easily decide a starting point. Find out the areas that interest you most and start there.

To keep the motivation alive, always aim for progress, not perfection. Track progress by using the many resources found online that can provide a benchmark for assessment.

Master the Rich Dad’s financial approach and the cash flow quadrant

This is a clever approach to finances that has been well outlined by Kiyosaki, a financial expert and New York best seller. Most people don’t know there are four facets to income generation. This will help in a paradigm shift that is necessary for revolutionizing your finances. The insight that is found here can inspire action and reveal an intrinsic motivation that can act as your anchor to developing life transforming habits.

Grab all the free professional advice you can get

Most Americans today have confessed that they don’t understand their debt. That is sad considering all the free information resources scattered around. The next time you walk into a bank take a moment to ask a few questions to the staff. These are professionals with careers they have formed around finances and they have dedicated their life to that. It will serve your interests to talk with someone who understands money.

Make use of online literature

You will be startled to learn that there are tons of online platforms that offer a wealth of information on money. The best thing is that you get to learn almost any topic for free. Most financial blogs are updated on the current financial knowledge and well laid out in simple language.

If budgeting it the target topic, there are blogs that will go as far as providing templates and suggest workable ideas on budgeting. In addition, becoming part of a budgeting community on the platform provides the moral support necessary for success.

There are also some experienced journalists that are dedicated to educating the public on the recent trends. Also, it will be great to follow them online and the lessons you can learn will be worth it.

Enroll in a course

We are in the digital age and that means you can learn just about anything in the comfort of your home. Platforms like Udemy are never short of resourceful courses that you can take anytime. If you want a different approach, there are comprehensive books on personal finance and most will come with worksheets to track your progress.

The government has partnered with local institutions and you can get educated for free. All that is required is to commit some time and the journey begins.

Start reading financial news and reports

In the business world, trends are changing every day and it is very easy to be left behind. To stay updated on the current trends, financial news should become a priority. Scanning through the pages only requires a few minutes but the insight can be priceless.

Determine what motivates your financial advancement

The world is full of useful advice and insight about money. While most people do listen, almost all of them ignore the lessons learned. In short, every great advice received is utterly useless until it is acted upon.

You must realize that there is a similarity between money matters and dieting. They both involve a change of habits that are deeply woven in a lifestyle. No matter how simple the implementation appears, habits are comfortable beds that are difficult to get out of.

If you will ever make any meaningful adjustments to your financial habits, you need some advice and action plans that anchor on your deepest motivations about money. It’s the only way to inspire a deeply rooted action that can stand the test of time.

Conclusion

Becoming smarter about money doesn’t require complicated approaches with long hours per session. Instead, taking a few moments regularly will lead to accumulation of a significant knowledge in finances. Every day ask yourself how much you know about a topic and work relentlessly towards mastery.

All that is needed is the right motivation and the process becomes effortless.

What to Consider When You’re Financing a Purchase

Consumers have a lot of power today. The Internet has enabled us to review providers and products, make recommendations and research prices before buying. There are also more ways to pay for purchases using credit.

All this gives you more control and purchasing power. However, without careful consideration financing, a purchase can be costly and negatively impact your credit score. If you plan to finance a major purchase instead of using cash here are some things to consider before signing on the dotted line.

Types of Financing Available

There are more financial tools today than ever before. That means there are a lot more options to consider. Deciding which type of financing to use is the first and most important decision you’ll make.

Retailer Financing

Some retailers provide direct financing to customers, but others may offer it through a third party. For example, Crest Financial is an alternative that offers in-home layaways. Unlike traditional layaway offers, the program allows customers to take their purchase home while paying for them.

business credit cardCredit Cards

One of the most common financing options is using a credit card. However, because of the interest rates (see below) credit cards may not be the most affordable option. They also tend to have low credit limits, which could make it impossible to finance an entire purchase for a high price item.

Short Term Loans

A short term personal loan is one way of getting a lump sum of cash when you’re in a jam and need to make an essential purchase. They can be tricky and expensive if you don’t follow the terms precisely. That’s why they usually aren’t the first choice for most people and should only be used for necessities.

Interest Rates

One of the most important considerations of any financing option is the interest rate. This is the fee that’s paid to the lender for the use of a credit or a loan.

Interest rates vary significantly based on the type of credit that’s being used. Your credit score will also be a determining factor in the interest rate. The higher your credit score is the lower the interest rate will be.

A no interest introductory offer can help keep the total purchase price low, but buyers have to be aware of the terms. Often the no-interest period is short and may be revoked if you make a late payment. If the purchase isn’t paid off at the end of the introductory no interest period the rate could be extremely high. Before taking a no interest offer, consider whether you will be able to pay the purchase off before interest kicks in.

Term Length

Term length refers to how long or how many payments need to be made. If you opt to use a loan there will be a definite term length that specifies when the loan needs to be paid off. Options like credit cards and retailer financing may be more open-ended.

Monthly Payments

Virtually all financing options will specify minimum monthly payments that have to be made. The payment will include interest and principle (funds that go towards paying off the purchase price). One thing to look out for on a loan is a prepayment penalty fee. These may be applied if you pay off the loan early.

Lender Credibility

Last but not least, you should carefully consider the lender’s credibility. Short term loans in particular have a reputation of less than scrupulous lenders taking advantage of borrowers. Another reason to examine the lender’s credentials is to determine how sound and secure the financing will be.

Buyers can check out a lender’s credentials and credibility at the Better Business Bureau. It’s also a good idea to read customer reviews to get a better idea of what it’s like to work with a lender.

 

Avoid the Dangers of Using a Credit Card this Holiday Season

christmas debtMany people fall victim to holiday credit card pitfalls every year due to a lack of knowledge about credit, in addition to failure to adequately prepare for holiday shopping using a credit card.

Should you open a retailer branded credit card?

One of the major pitfalls of holiday credit card usage is that consumers often get convinced by retailers to open a department store branded credit card in order to realize about 10 to 15% savings on purchases at those retailers. While these savings may be tempting, most people don’t realize that the credit cards offered by these retailers generally feature a very high interest rate. If you, as a consumer, plan to carry a balance on this new credit card at all, then you will lose the amount of money that you originally saved by opening the card, and more. In addition to these high interest rates, opening new lines of credit too often in a small period of time has the potential to damage your credit score. As a rule of thumb, respectfully decline when retailers ask you if you want to open a new credit card with them to receive a discount on your purchases.

Set yourself a holiday shopping credit limit

Consumers can avoid putting too many gifts on credit simply by setting themselves their own personal limit, and keeping track of what they buy. For example, a consumer could set a personal limit of $500 to spend on credit during this holiday season, and when they reach that limit, they have to stop putting purchases on their credit card and instead start paying in cash. While its always tempting to spend a bunch of money to buy your friends and loved ones gifts, they will understand if you simply cannot afford to spend outside of your means. If you’re looking for a good way to monitor your spend, many credit card companies offer free mobile apps that allow you set up alerts that notify you when you’ve reached a certain spend.

How can using a credit card for your holiday shopping benefit you?

Using a credit card for your holiday shopping, however, can definitely benefit cardholders because of the vast amount of rewards that can be gained by putting purchases on your credit card. You should compare rewards credit cards in order to maximize the rewards you will receive based on your spending habits. As long as you know you can afford to pay off your balance without incurring large interest fees, you should put your holiday purchases on your credit card because most credit cards offer some sort of reward for each dollar spent.

photo by paparutzi

The Bible and Finance: The Myth of the Prosperity Gospel

prosperity gospelIn my last article, I talked about the story of the rich young man and how finances is merely one of many idols people can have in front of God.  I also pointed out that the Bible does not condemn wealth, per se, but what is done with it.  On the other side of the coin, however, is one of the more subversive beliefs today within the Christian Church: The Prosperity Gospel.

Pure heresy at it’s finest

Make no mistake about it; it is more than a simple misunderstanding or poor reading of Scriptures; it’s pure heresy.  The Prosperity Gospel teaches that if you are a “good” Christian, you will be rewarded with success in worldly endeavors, i.e. your wishes and desires, whatever they may be, will be fulfilled.

Christianity, under this Gospel, becomes a mathematical formula in which your righteousness is directly proportional to your worldly blessings.  In America and many developed nations, this false Gospel has taken root due to our unparalleled degree of personal and national wealth.

Preachers and followers of this Gospel use examples from the Bible where righteous men such as the patriarchs (Abraham, Isaac, and Jacob) were all wealthy, as were kings such as David and Solomen, under whom gold became so common that it was practically worthless.
One such verse they use to advocate this belief comes from Psalms 37:4

“Delight yourself in the Lord and he will give you the desires of your heart.”

 

False teachers are everywhere

What makes this belief so subversive and destructive is that those who promote it do not do so blatantly, but discreetly.  Prosperity Gospel preachers and churches will not state directly that if you are poor or financially struggling that you are somehow less of a Christian than someone who is rich. If you listen to their sermons, however, and listen carefully to what they are actually saying, there is a subtle, yet unmistakable theme that righteousness is connected to worldly success. Their sermons consist of how if you accept God as your savior everything in your life will get better and the things you desire can be gained through “trusting God.”

They will quote Scripture, such as Deuteronomy 30:15-20, where God promises blessings on those who are obedient to his word and trouble on those who do not.
Or they will point out stories such as King Manasseh (2 Chronicles 33:1-20) and King Nebuchadnezzar (Daniel 4:28-36). Both were torn from their throne and riches because of their flagrant disobedience to God. After they turned back to Him, their kingdoms and riches were restored to them.

Yet, the Prosperity Gospel falls apart under the weight of both Scripture and the example Jesus set for Christians.  All one need do is point to Jesus’ warning in John 16:33:

“In this world you will have trouble. But take heart! I have overcome the world!”

Yes, there were men in the Bible who were blessed with wealth for their faithfulness.  There were also men who were not, and it had nothing to do with their faith.

The Prophet Elijah lived penniless and homeless for years while he prophesied against King Ahab. He was so poor he had to beg a woman, who was on the cusp of starvation, for food.

John the Baptist lived a spartan-like existence in the desert by himself, subsisting off of locust and honey. All he had for clothes was a leather belt and camel hair. He was ultimately was beheaded by King Herod.

Yet, in both instances, these men were praised for their righteousness. Elijah was taken up into Heaven and did not experience death. Jesus called John the greatest man – aside from himself – who ever lived.
It’s absurd that such a belief like the Prosperity Gospel has taken root, since the entire Book of Job is dedicated to squashing this attitude. Unfortunately the sad truth is that it is easy for us to jump to the same conclusion as those who follow the Prosperity Gospel.

 

Bible and modern day

Sometimes it can be hard to understand Biblical stories without giving them a modern comparison. As I pointed out in my previous article, Job was probably the richest man who ever lived. The Bible says he owned 7,000 sheep, 3,000 camels, 500 oxen, 500 donkeys, as well as the necessary servants to tend to these flocks. He also had a large family, seven sons and three daughters. Later chapters in the book imply he also held considerable sway over the political issues in his region and was well-respected.

Try to imagine a billionaire businessman/politician who had a large, closely-knit family, power and influence on a national level, and outwardly showed every sign of godliness.
Then suddenly, he loses everything he owns through a series of natural and unnatural events in a single day, along with all of his children. Shortly after, he is stricken with a myriad of diseases and illnesses.

Our first reaction to such news would be, sadly, predictable.  What did he do to make God so angry at him?  According to the Prosperity Gospel, this is the only possible explanation. Why else would God cause one of his followers so much pain?

This is exactly what Job’s friends believed; the the Book of Job contains long lectures Job’s friends give him, telling him he had to have sinned horribly in order to have brought such a disaster down on himself, and that only by repentance could things change.

Job knew in his heart this was not so. While he did not understand why God has caused him so much sorrow, he knew that it had not been because of anything he had done.
Job 2:10 is probably the best verse to dismantle the Prosperity Gospel.

“Shall we accept good from God, and not trouble?”

Only the reader is aware that Job is being tested by God to see if he will hold onto his faith after losing everything.

In the end, God chastised Job’s friends for their false teachings, which is essentially the Prosperity Gospel, and rewarded Job for not accepting it by returning his wealth, then doubling it.

Inasmuch as Job contradicts the Prosperity Gospel, the rest of the Bible is full of examples which disprove this myth.

Not one of Jesus’ disciples ever became rich; they all died gruesome, horrific deaths preaching the Gospel. The Apostle Paul was flogged, whipped, stoned, beaten, ship wrecked, and finally beheaded.

Other Christians in the first century were covered in pitch and burned as torches by Nero or torn to pieces by wild beasts in the Colosseum because they refused to recant their faith. Martyrs like Polycarp and John Hus were burned to death.

 

What about the rest of the world?

To this day, Christians in Africa and the Middle East are martyred or live in constant fear of death or imprisonment.

If the Prosperity Gospel is true, then what are they doing wrong?  The sad truth is that this heresy only exists in developed countries, such as America, because only in such countries would it ever make any logical sense. Insomuch as people complain about income inequality and the 99 vs. 1 percent, we have attained such luxury that all one has to do is avoid making poor life choices and one can still live a life of relative affluence.

In Third World countries, where death, war, terror, disease, and persecution are commonplace, the Prosperity Gospel and its believers would be ridiculed. In developed countries, proclaiming faith in Jesus Christ will bring scorn or ridiculed, but in countries like Iran or Afghanistan, it’s akin to signing one’s own death warrant.

 

Prosperity gospel a bunch of non-sense

The Prosperity Gospel is essentially a blend of Christian gnosticism and eastern religions’ belief in karma, where the unfathomable complexity of God’s divine plan for the individual and all of mankind is reduced down to a facile modus operandi. It also takes away the true purpose for following God and replaces it with the greed desire for possessions.

Nowhere in Scripture does it guarantee that a Christian will live a life blessed with material possessions if they follow God. Any verses used to promote this idea are twisted and taken out of their proper context.

The Apostle Paul and the other authors of the News Testament state a very consistent message; if you are faithful to God, he will strengthen you spiritually. He will enable you to accomplish great things in advance of the Gospel.

He will not, however, necessarily make life easy in terms of finances or anything else. As I stated before, however, this also does not mean that as Christians we are commanded to be poor or shun wealth. Wealth can be a sign of God’s blessing on an individual, but it also may simply be an indication of what a person truly worships in life.

Christians should never look at their worldly possessions, financial security, or social status as an indication of their favor with God.  Rather, they ask themselves how great their wealth is that they have stored up for themselves in Heaven.

As Jesus said,

“For where your treasure is, there your heart will be also” (Matthew 6:21).

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