The concept of financial literacy refers to knowing the basics of financial concepts to make smart decisions. Specifically, financial literacy can help prevent costly mistakes that could derail your life plans, prepare you for emergencies, help you reach your goals, and can help provide you a comprehensive view of your financials while giving you the confidence you need to make important decisions.
Let’s look at some of these benefits. Firstly, having financial literacy can help prevent costly mistakes. For example, knowing the difference between a fixed and floating-rate loan, the latter of which changes month-to-month, can keep you from taking a loan that could rise too high for you in a later month. In addition, you may currently contribute a chunk of change to your IRAs or 401(k)s without knowing when you can withdraw those funds without penalty. So, if you were saving money to your 401(k) to make a down payment on a home purchase, you’d most likely face a 10% penalty if you borrowed those funds before the age of 59.5. You could also see your account values drop if your investments didn’t perform well. That does not even include the red tape sometimes involved in accessing funds from an employer-sponsored account.
In short, decisions that seem financially prudent, such as maxing out a 401(k), can actually hinder your ability to meet your financial goals if you don’t know the basics of the tools you’re using.
Secondly, financial literacy can help you soften the impact of an emergency. If you hold to a budgeting strategy that favors your savings, you can help cover unexpected costs that can occur from an untimely job loss or an emergency health expense. Extra financial padding can get you back on your feet by allowing you the time needed to find a new job in line with your career path, rather than having to take any job quickly due to your financial situation.
Ultimately, financial literacy can help you reach your financial goals, simply by being aware of the small things. You can create strategies that set expectations, hold yourself accountable for your finances, and set a course for achieving goals. Though someone may not be able to afford their dream lifestyle today, they can always plan to increase their odds of making it happen. Think of your finances as your ship on a journey; one small hole in the bottom of your ship can bring the whole thing down if left unfixed.
A financial professional can help you better understand financial literacy and can help you take the next step in securing your financial future with a comprehensive financial strategy. Contact us at (540) 720-5656 to get started with a financial advisor.
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Amy Anderson joined the ILG Financial team in 2023 as the client relations coordinator. Her responsibilities include scheduling of appointments, annual check-up notifications, and annuity and required minimum distribution assistance. She is a graduate of Harding University with a degree in Computer Information Systems. Amy and her husband have two children and she enjoys reading, crocheting, music and spending time with her family.
Chase Lopez joined the ILG Financial team in 2020 as an advisor. Chase is a 2016 James Madison University graduate with a degree in management. Chase has been trained under the tutelage of Dave Lopez, who is not only the founder and managing member of ILG Financial, but also is Chase’s uncle and godfather. He also enjoys working alongside his cousin, Megan, who is Dave’s daughter. Chase, as a fiduciary, believes in putting his clients interests first, and building out plans for his clients where they can have a happy and fruitful retirement. He married his beautiful wife in February 2022 and both use most of their free time chasing around their little pup, Aurora.
Jessica Carson joined the ILG Financial team in 2018 as an agent. Jessica and her husband have four children, two dogs, 3 barn cats, 5 chickens, and three parakeets. She indeed loves her children and pets! When not at work, Jessica enjoys playing the piano and cello as well as traveling and spending time outside with her family, hiking, fishing, and boating.
Terri Center joined the ILG Financial team in 2019 as client services manager. She handles client records, application processing, and gathering information to provide a professional and friendly experience with all of our clients. Terri is a graduate of Oakland University. She is married and has two children. She enjoys hiking, family time, and puzzle challenging video games. She also likes to share her creativity in her canvas paintings and sewing projects.
Megan Jones joined the ILG Financial team in 2020 as marketing director. Megan and her husband live in Fredericksburg, VA with their German Short Haired Pointer, Gus. Megan is a graduate of Longwood University and holds a degree in communications. Megan is the oldest of Dave Lopez’s three children and not only enjoys working alongside her father, but also with her cousin, Chase, who joined the ILG Financial team in 2020 as an advisor. When not at work, Megan enjoys sitting on the back porch with family and friends enjoying food and music.