April 2023 is Financial Literacy Month (actually, rebranded by President Biden as “National Financial Capability Month,” but the older name takes less time to say). Originally established by the Obama administration as a time to focus on educating kids to be smarter financial participants in the economy, April of each year is a time for people of all ages and stages in life to think about their finances in new ways; to learn new things that will help increase their financial understanding.
Of course, many of us are in the final stages of preparing and filing our tax returns before the April 18 deadline, so we may be somewhat in “financial mode” already. But beyond sending our yearly payment to Washington, DC, we can also be focusing on how to improve our finances, how to take better advantage of our available resources, and how we can improve our chances of achieving our most important financial goals.
At the outset, we should remember that the biggest problem facing Americans today, in terms of financial literacy, is the lack of attention given to the importance of saving, especially early in life. And we all know what happens when unexpected expenses come along and there’s no cash in the kitty: we reach for a credit card. Uncontrolled credit card debt is the culprit behind a majority of the financial stress for most Americans. For that reason, the most important focus for everyone, regardless of age, is on how to put more money away, sooner, and avoid the credit card trap that so often derails our best-laid financial plans.
Following are a few tips for increasing financial well-being and understanding for anyone from age 5 to age 75—and beyond.
For young children and high school students. Many classrooms will be incorporating activities designed by the National Financial Educators Council to support this special April focus. These may include games, trivia contests, financially-themed parties, and other resources designed to stimulate the financial conversation with kids. But parents can get involved, too. The Jumpstart Coalition provides resources to help parents engage their kids’ schools and others to focus attention on the importance of financial literacy. But it doesn’t end there. Online resources like MoneyTime, Piggyy.com, and others offer fun, parent-guided activities that help kids learn sound principles delivered in age-appropriate contexts. In other words, you don’t need to wait for the schools to do it for you: you can take charge of your kids’ financial education.
For graduates and young professionals. One of the most important financial key at this stage is to thoroughly understand the importance of saving. Even if you start with small amounts placed regularly into a savings account, these are the years when the power of compounding is most in your favor. For many, especially those in their 20s, the notion of retirement is pretty hazy, especially compared to other priorities like student debt, buying a house, and other considerations. But remember, money in savings can be your best leverage for all of these important goals. And of course, as you move farther into your career, you’ll start to think more about the longer term. The key is establishing the “savings habit” as early as possible. Once you’ve done that, you’ll be able to transfer your savings focus to your various financial priorities as they develop over time.
For mid-career professionals and parents. These are the years when many are balancing careers with parenting. You’ll want to learn as much as you can about options for getting a leg up on retirement savings—401(k)s, 403(b)s, IRAs, and other tax-advantaged savings tools—and also thinking about funding education for your kids, by looking into 529 plans and other ways to save for college on a tax-favored basis. And by the way, taking advantage of these and other tax-favored plans is one of your best options to help reduce the size of the check you’ll write to Uncle Sam each year.
For those approaching and in retirement. This is the time of life when your focus is shifting away from the demands of a job and toward the things and people you’re most interested in. But that doesn’t mean you should quit paying attention to your saving and spending patterns. In fact, one of the keys to a successful retirement is having a smart income withdrawal strategy that minimizes taxes while providing the money you need for your desired lifestyle. Especially with the recent passage of SECURE 2.0 and the higher age for required minimum distributions (RMDs), you’ll want to think carefully about all your sources of income and how drawing from them will affect your tax picture. For more information and resources about the SECURE 2.0 Act, please visit Mercer Advisors dedicated.
For all these stages in life, advice and guidance from a fiduciary financial advisor can put you well ahead of the game in designing your financial strategy. At Empyrion Wealth Management – Mercer Advisors, we work with investors of all ages to develop personalized financial blueprints for long-term success and security.
Stay Diversified, Stay YOUR Course!
All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change. Some of the research and ratings shown in this presentation come from third parties that are not affiliated with Mercer Advisors. The information is believed to be accurate, but is not guaranteed or warranted by Mercer Advisors. Content, research, tools, and stock or option symbols are for educational and illustrative purposes only. For financial planning advice specific to your circumstances, talk to a qualified professional at Mercer Advisors.
