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It’s Your Money: Give yourself the gift of financial literacy – some FAQs to help


NOTE TO READERS: I’m debuting a new feature, “Scam of the Month,” which will appear at the bottom of each month’s column. As scammers become more sophisticated, consumers are being inundated with potential scams. Each month I’ll highlight a recent incident and discuss how to avoid being scammed. Now, on to this month’s It’s Your Money topic.

NEWS: New Hampshire’s Financial Literacy Report Card grade is expected to rise from a B to an A by 2028, according to the Centers for Financial Literacy.

WHAT THIS MEANS TO YOU: Knowledge is power, and the more financially literate you are, the better choices you’ll make and the fatter your wallet will be.

You may have heard the term “financial literacy” and have a vague idea about what it means, but probably haven’t looked much deeper than that. Or maybe you have. New Hampshire, we can be proud to say, is one of nine states that gets a Grade B for its high school financial literacy education effort in the latest Center for Financial Literacy Report Card.

But you don’t have to be a high school student to need financial literacy education. You probably remember May’s column, which had a financial literacy quiz given every three years by the FINRA National Financial Capability Study. New Hampshire residents who officially took it with FINRA scored above the national average, but that’s nothing to crow about. There was a lot of room for improvement.

If you are looking woefully at your nearly empty bank account and statements from your maxed-out credit cards and wondering how you’re going to get back on track after a frenzy of holiday shopping, or just from paying bills, maybe it’s time to look at getting financially literate.

Being short of money is nothing to be ashamed of. Knowing how it your money works, however, is something to be proud of and will help you financially and give you peace of mind.

The 2023 TIAA Institute-GFLEC Personal Finance Index found that, on average, adults in 2023 could only correctly answer 48% of its 28 questions relating to eight consumer finance topics. “This low level of financial literacy is troubling, since the P-Fin Index measures working knowledge related to financial situations encountered in the normal course of life,” the study said.

You don’t want to be that guy, right? So here’s what you should know about financial literacy and how you can become more financially literate.

Why is financial literacy important?

If you don’t believe me, believe the numbers. According to the PF Index, “Greater financial literacy generally translates into greater financial wellbeing, and lower financial literacy is generally associated with lower financial well-being.” The 2023 study found:

  • Those with a very low level of financial literacy are more than four times as likely to have difficulty making ends meet in a typical month; nearly three times as likely to be debt-constrained; three times more likely to be financially fragile; more than four times as likely to lack emergency savings sufficient to cover one month of living expenses; more than three times as likely to spend 10 hours or more a week on issues and problems related to personal finances.
  • Across all genders, populations and generations, there is typically a double-digit decrease on financial well-being indicators for those with relatively low financial literacy when compared to those with relatively high financial literacy. 
  • Financial literacy is strongly related to inflation-induced changes in individual personal finances. For instance, employed adults with very low financial literacy were more than four times as likely to stop saving for retirement in 2022 because of inflation’s impact on their finances, compared to those with a very high level of financial literacy.

Studies have also found that the economy as a whole improves the more financially literate consumers are.

What IS financial literacy?

Financial literacy is having the skills, knowledge and resources to manage your money effectively.

The index measures the specifics as:

  • Earning (wages and take-home pay)
  • Consuming (budgets and managing spending)
  • Saving (factors that maximize accumulations)
  • Investing (investment types, risk and return)
  • Borrowing/managing debt (relationship between loan and credit features and repayment)
  • Insuring (types of coverage and how insurance works)
  • Comprehending risk (understanding uncertain financial outcomes)
  • Go-to information sources (recognizing appropriate sources and advice) 

The index gets its categories from the National Standards for Financial Literacy outlined by the Council for Economic Education.

The lowest correct response category was in the area of comprehending risk, which the index describes as “understanding that the expected outcome in a given scenario depends on the range of possible outcomes, the financial implication associated with each outcome, and the likelihood of each outcome occurring.”

Here’s a typical comprehending risk question from the survey:

There’s a 50/50 chance that Malik’s car will need $1,000 in engine repairs within the next six months. There is a 10% chance that he will need to replace the air conditioning unit in his house, which would cost $4,000. Which poses the greater financial risk?

The answer is: Despite the air conditioning repair potentially costing Malik $4,000, the likelihood of the car repair is far greater, meaning it poses a more significant financial risk even though the dollar figure is less.

If I don’t know all that stuff now, how am I suddenly going to learn it?

Start with small steps — the most important are learning to budget [and sticking to it], and learning about credit card debt and how it works. You will likely see immediate positive financial results by understanding where your money is going and learning to control it. Remember, you’re the one in charge, not the money and the bills.

If you’re going to make a purchase or apply for credit or a loan, do your research and find out what’s involved, what the terms mean and what the short and long-term impact will be on your financial situation.

Being proactive and learning about your money as you make financial decisions will lead to a good financial literacy foundation.

It never hurts to take advantage of free information, but if you’re having trouble making ends meet, find a nonprofit credit counselor through one of the resources below to talk to. Discussions are often free, and if not, the fee is very low. The key is “nonprofit.” Such counselors are fiduciaries, which means they are required by law to give you advice that’s in your best interest, not to sell you a product. Do not look to for-profit debt settlement companies, or anyone who charges a large fee, to help you with financial literacy.

Where do I start?

There are many organizations that offer free classes on money management, budgeting and financial literacy for adults. You don’t have to be in a tough situation to take advantage. Financial literacy is for everyone.

Check out the website of your bank or credit union, for example. Credit unions, in particular, often have detailed financial literacy information on their sites. Mycreditunion.gov has great tips on creating a budget and meeting financial goals.

Some other resources are:

Scam of the Month

A man in Hingham, Massachusetts, on Dec. 2, lost nearly $100,000 to a scammer who accessed his financial accounts. It started off pretty simple. The scammer called and said he was from PayPal and that $100 had accidentally been deposited into his account. The scammer had the man call his account up on his computer, share his screen, and then went to town ripping the guy off, as $100 became $100,000. The scammer made it look like the money was somehow in the victim’s account and the only way to get it out was for the man to withdraw it and send it to the scammer. This involved the scammer having the man go to the bank and take out two cashier’s checks for $49,800 each to “pay back the money.”

The scammer also told the man that if anyone at the bank asked why he was withdrawing the money, to tell them it was to buy a car. (Shame on the bank for not asking!).

This may sound complicated and like something you wouldn’t fall for, but there are a variety of scams that rely on many of the elements in this one, and they may seem more legit.

Here are some tips to avoid getting scammed in this way:

  • If someone calls and says they’re from a legitimate business and that there is a problem with your account, hang up and call the business using its real phone number. Do not call the number that called you. If they say they’re from “PayPal” and the issue is with your bank account, call your bank and ask about it.
  • Any time you get a call, text or email regarding an “issue” with your bank account, call or visit your bank. Again, call your bank’s real number, the one on your mobile app, the website or your statement. If the communication is by email or text, DO NOT call the number on the email or text, call the real number for the bank or business.
  • If someone tells you to lie to your bank, that’s a huge red flag. Never lie to your bank about anything having to do with your money or the accounts they hold, especially at a stranger’s request.
  • Never ever ever get cashier’s checks or gift cards at the request of a stranger, even if it seems like they’re from a legitimate business. Once you hand them over, your money is gone and it’s never coming back.
  • Never ever ever ever share your screen with someone (unless you’re at work and it’s your employer’s IT department for something to do with your job).
  • There are many scams out there now that are related to PayPal. Question any communication that purports to be from PayPal, Venmo or Zelle. If it’s an email or text, do not call the “customer service” number that’s on the communication. It’s part of the scam. [It may be difficult to reach real PayPal customer service; but you don’t have to. Change your password and unlink your bank accounts from PayPal; only link them back when you need to transfer money].
  • Don’t let anyone on the phone rush you into making financial decisions or into “solving” a financial or technical problem that involves money accounts. 
  • Don’t be afraid to be rude or hang up on a scammer.


About this Contributor

Maureen Milliken

Maureen Milliken is a contract reporter and content producer for consumer financial agencies. She has worked for northern New England publications, including the New Hampshire Union Leader, for 25 years, and most recently at Mainebiz in Portland, Maine. She can be found on LinkedIn and Twitter.

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