Just over half of Americans have difficulty passing a basic financial literacy test, according to industry data. What’s more, roughly 40% of respondents to a Stash survey¹ lacked an understanding of basic economic terms, like compounding and inflation.

While you can always bone up on your money-related vocabulary words, cultivating a deeper understanding of financial basics can help you reach your long-term goals. That can include buying a car or house, starting a family, or even retiring one day.

What does it mean to be financially literate?

Financial literacy, or a basic understanding of principles concerning money, is essential if you want the ability to honestly consider your financial situation, map out realistic goals, and develop a strategy to achieve them.

That can include making smart daily choices for spending, saving, and investing, as well as getting yourself out of debt, and avoiding unnecessary risks.

If you’re one of the millions of Americans wondering why financial basics weren’t covered during your high school years, it’s never too late to learn.

Here’s a quick rundown of some basic personal finance principles that can help you get caught up.

Learn to make a budget

Building a budget is step one on your path to understanding your own personal finances. A budget is a blueprint for your money, accounting for your income and spending, which should help you establish a plan going forward. 

Read How to Use a Budget to Stay on Track to get started. 

Get smarter about banking fees

You probably have a bank account, and you probably have a general idea of how a bank works. But not all banks are the same, and some will nickel and dime you with fees.

Are you paying too much in bank fees? Find out here: Bank Fees to Avoid

Be savvier about your saving

Saving is critical. If you’re in a tight spot, you’ll want to have a little extra cash you can use. And if you have goals such as buying a house, you can save for them over time. 

At Stash, we commend having a rainy day fund with $500 to $1,000 for surprise expenses, as well as an emergency fund with three to six months worth of expenses. Saving is part of our financial philosophy, the Stash Way. 

It can be difficult to start saving. But as of April 2020, Americans were saving a record amount as a result of the Covid-19 pandemic. If you have extra cash right now—maybe from a stimulus check or your tax return, if you got one—consider putting a chunk of that money into an emergency fund now before you spend it.

Good to know: Many people often conflate saving with investing. They can both be used for financial planning, but there are some differences. We won’t get all preachy and tell you that you need to save more, but more than half of Americans regret not saving more, according to a Bankrate survey. 

You may want to consider reviewing concepts like compounding and inflation while tackling your savings goals.

Read Saving vs. Investing: What’s the Difference?

Learn investing vocabulary

You can quickly go down a rabbit hole when you start digging into the world of investing. The basic premise, of course, is that you’re trading your money for a share in an asset such as a stock, bond, or ETF. The hope is that your investment may grow and benefit you in the future. Or, in other words, you’re putting your money to work. Keep in mind, however, that the market is not predictable and that your investment is subject to volatility, meaning that it can gain or lose value over time. 

Get your education started with Investing for Beginners: a How-to Guide. Our glossary of financial terms might also help you.

Overcome performance anxiety

A portfolio is an investing term that means your assets, including stocks, bonds, and cash. Your portfolio’s performance and return refers to how the assets in your portfolio gain or lose value over time.

Learn more about investment performance. Read: What is Investment Performance?

You may also want to consider Stash’s Smart Portfolios.² They are personalized portfolios, created by Stash’s investment team of financial experts³, that can help take some of the guesswork out of building a diversified portfolio.

It’s all in your hands

This checklist can help you start building your financial foundation by budgeting, saving, and investing. With Stash, you can do all of these things in one place.⁴ You can save for your goals with Goals⁵ pay your bills automatically with Bill Pay⁶, and invest in fractional shares of stocks, bonds, and ETFs. 

Also, remember to check out the Stash Way, our financial wellness guide for saving, investing, and planning.

The post Clip & Save: Your Financial Literacy Checklist appeared first on Stash Learn.

Here’s a checklist of ten things to consider doing before you ring in the new year.

1. Automate your savings

Automatic beats manual every time.

You can use the Set-Schedule feature as part of the upcoming new and improved Recurring Transactions tools to make it easier to put your savings and your investing goals on autopilot. Just program how much money you want to put aside toward your investments and how often (say $20 toward your preferred investment mix every week). No need to remember to do it. It’s a great way to build great habits, week in and week out.

2. Set financial goals for 2019 calendar year

Create a budget and stick to it. Aim to set aside money from each paycheck to build an emergency fund, which should have three to six months of expenses in an account you can access easily.

Then, think about your longer-term goals. Are you thinking of buying a house or a new car? Just “saving money for the future” can be sort of vague (and not that inspiring). Be more concrete about what you’re saving or investing for and you’ll be more excited to get there.

3. Get inspired to save for retirement

Whether you have a 401(k) or a Stash Retire account, think about how you can start to contribute as much as you can.

An IRA or 401(k) can help lower your tax bill as you save for retirement. You can put away $6,000 in IRA and Roth IRA each year. (In 2019, the maximum contribution increases to $6,000.) A 401(k) will let you contribute $18,500 annually, and $24,500 once you hit 50.

Can you try to hit the maximum contribution in 2019? It’s definitely worth trying.

4. Review your insurance policies

Whether you rent an apartment or own a home, you’ll want to get covered. It can protect you against theft and many of other catastrophes, potentially saving you both time and agony. And if you’re a homeowner, your home or apartment may have increased in value, thanks to climbing property values, your renovations, or other updates. You may need to insure for a higher value.

Same goes for your term-life insurance policies. If you’ve had a child or grandchild, or are caring for an elderly or ill parent, you may need a higher value policy. Don’t have life insurance? Now’s the time to figure out if you need it–before you need it.

5. Check your credit report

Don’t just swipe and pray. Find out what’s in your credit report. It contains all of the information about your loans and credit accounts, in addition to personal information about you, including your name, address, Social Security number, and employment information.

Each of the three credit reporting bureaus—Experian, Transunion, and Equifax—collect this information and provides it to lenders when they perform a credit check on you. They also use it to compile your credit score.

Start 2019 on a good note. You are entitled to a free credit report from each of the three credit bureaus every year. Many other sites also offer you insights about your credit, without dinging your credit score.

6. Contribute to a custodial account

Got a kid in your life that deserves a head start? A custodial account is just like an investment account, except it’s for your kids or any child for that matter. Stash lets you create a portfolio in a custodial account using any combination of the individual stocks or funds on the Stash platform.

There’s no limit to how much a custodian can put into an account each year, and no maximum lifetime limit. Opening one is easy, just start here.

7. Make the most of your Flexible Spending Accounts

You may have a Flexible Spending Account or FSA through your workplace. Your FSA lets you put money away on a pre-tax basis, which can lower your tax bill while giving you access to funds to pay for many of your medical charges.

An FSA is primarily a use-it-or-lose-it account. That means you don’t get to keep any unused money you’ve put away for the year.

8. Schedule year-end health care appointments

There’s nothing more important than staying healthy. Next year is a fresh year, and most health plans will reset the clock on your annual deductible, which can mean you’ll pay hundreds or thousands of dollars before your health charges are fully reimbursed (minus your copays.) Consider scheduling medical appointments before 2019 starts.

9. Give to charity

Your gifts to charity can be tax-deductible, and there are hundreds of worthy charities out there, from disaster relief to helping fight childhood hunger. Also, your donations don’t have to be cash. Some charities will allow you to donate used clothing and furniture, among other common household items.

10. Get Stash

Stash makes it easy to get started investing and saving for all the things you want to do in life. You can start with just $5.

The post Want to Have a Happy New Year? Do These 10 Things appeared first on Stash Learn.