How Financial Literacy Can Help You Achieve Financial Stability

| September 21, 2023 | By

Knowing how to manage your financial health can be tricky. Fortunately, community banks can help.

If you need help understanding the nuts and bolts of money matters so you can wield your hard-earned resources well, there’s a good chance your bank is the resource you need. It’s easy to feel like today’s financial landscape is a mysterious maze of choices, opportunities, and pitfalls. Partnering with your community bank and building your financial literacy can help you work toward financial stability—and peace of mind.

It’s a safe bet that you’ve experienced similar transactions and financial decisions. Financial literacy equips you with the knowledge you need to navigate these choices confidently.

If you’re financially literate you’ll be prepared to:

  • Know the difference between wants and needs.
  • Plan for rainy days with strategic savings.
  • Invest intelligently by understanding the power of compound interest.
  • Take control of your money.

Want to connect those dots a little more concretely? We’ll talk a little more about how financial literacy can lead to financial stability.

Empowerment Through Knowledge: How Financial Literacy Contributes to Financial Health

Let’s take a look at the following items in your financial literacy toolkit:

Budgeting and Saving

Understanding your income, consistent expenses, and how much you can save can go a lot further than you may think! Your budget shouldn’t just be a complicated spreadsheet that tells you to cut out snacks; it should be a roadmap to help you reach your goals.

Start by tracking your spending for one month, then review those expenses to see if you can track common patterns.  

Investing for the Future

Another significant part of financial literacy is understanding the massive potential of investing. A great example of this is knowing the value of compound interest—or what happens when your money earns interest and then that interest earns even more. Giving compound interest time to work for you can result in long-term financial growth, so starting early is key.

Navigating Financial Products and Services

Community banks can connect you with important financial tools, from business banking accounts to credit cards. Knowing what these offerings are, which offerings are best for your situation, and how to take advantage of what your bank provides is part of financial literacy.

So is knowing the perks of community banking.

For example, do you know what it means when a bank is FDIC-insured? FDIC insurance safeguards your deposits up to a certain limit, ensuring that your money remains protected and secure even if the bank faces difficulties. Your bank may also offer personal loans to help you plan and pay for life’s important moments—from home improvements to emergency medical bills.

Avoiding Pitfalls Through Financial Literacy

Financial literacy is about more than making the most out of financial opportunities. It should also help you avoid making common money mistakes.

With proper knowledge, you might avoid falling for too-good-to-be-true investment schemes or racking up credit card debt without understanding the high interest that comes with it. Being financially literate means you're not just chasing the rainbow—you're dodging the storm clouds, too.

Preparing for Emergencies and Future Expenses

Life is full of surprises. Not all of them are pleasant.

Having an emergency fund or financial safety net can make handling unexpected events a lot easier—whether it’s a sudden move, job loss, or family emergency. Using your financial literacy skills to save a few extra pennies for your rainy day fund can make a big difference. Community banks can make this process easier by offering specialized accounts tailored for future needs—such as savings accounts designed for kids or geared towards college expenses. 

Ready to Work with Your Community Bank to Support Your Financial Stability?

No matter who you are or which life milestones you may be working toward, investing in your financial knowledge will pay off over time. At BNC National Bank, we’re always helping our community members discover more ways to use our financial resources.

If you’re interested in learning more about how our bank can help you work toward your financial goals, give us a call or check out our library of resources. In the meantime, if you or a loved one is a business owner, we’ve got a guide you may want to read right now: Are You Ready for An SBA Loan?

Are You Ready for an SBA Loan