The Impact of Financial Literacy on Homeownership
- 2 min
What you'll learn.
- Understanding financial literacy
- Learn how to budget
- Tips on how to save
According to The National Financial Educators Council, the definition of financial literacy is understanding the topic of money. And although we, as adults, know the importance of money, many people do not have the knowledge, understanding or resources to achieve financial well-being. This financial literacy month we wanted to make it our priority to effectively educate the important role of money in the homebuying process.
According to Nex Gen, Only 16.4% of U.S. students are required to take a personal finance course to graduate high school.
In some households the subject of money isn’t considered a dinner topic. Therefore, it’s often on the school system to teach monetary value to children, but in some school systems financial literacy isn’t always a requirement.
On the other hand, some children are taught at an extremely young age that by doing chores they will get paid. Then they can use their hard-earned cash to buy candy or a toy they’ve been eyeing. But, are they learning the importance of saving? All of this is to say that understanding financial literacy varies. This can lead to overall financial gaps, in our society.
Let’s talk about budgeting.
No matter how much money you make, there’s always room for budgeting. Put it this way, if you’re making money, you should be budgeting. Creating a budget takes time, it takes a few bank statements to sit down and look at what goes out and what comes in. Groceries, internet, and phone bills all add up.
If you have a firm grasp on your spending habits, chances are you’re able to figure out where you might need to cut back to create some sort of savings for yourself, for your retirement or your children’s college education.
Being able to budget can save you from debt. Debt is easy to accrue but hard to pay off. If you’re budgeting for your needs versus wants then you already know what you can and cannot afford each month. Which may help you find ways to save.
Let’s talk about saving.
Saving your money is no easy feat. Learning to put away a portion of your paycheck is a learned behavior that may have started with your piggy bank or saving for your first car. Understanding the importance of a savings account may seem impossible, especially if you’re living paycheck to paycheck. But having one will protect you if you’re in a bind and set you up for success when it comes to homeownership.
Buying a home is one of the biggest financial investments you’ll ever make and having a savings account will help you when it comes time to make a down payment. Not all mortgage loan products require down payments, but building that savings account is beneficial, nonetheless.
Whatever your unique situation may be, our mortgage bankers are here and can do a financial check as it pertains to the homebuying process. Let’s schedule a call!