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Tech Talk

The Path to Financial Literacy

Written by Mike Vaughn

You may have found yourself asking, “what exactly does financial literacy mean?” Understanding the topic of money sounds simple enough, but its complexity depends on our goals. For everyday life, we only need enough to pay our bills and not be overdrawn by payday, but we may be able to do better than that by paying more attention to the ongoing struggle between our wallets and our bank accounts.

The odds of hitting the jackpot are 1 in 302,575,350, according to Mega Millions. Upon discovering this, most of us must find a different path to financial independence. The saying “spend less, save more” is a good start, but there’s so much more that we can do. We’re not going to go into the stock market here, but we’ll cover some easy things you can start doing today, tomorrow or next week.

Why is Financial Literacy Important

A basic understanding of your finances can help you set financial goals, manage your credit and even determine which bank you should be using. Obviously, the sooner you figure out your finances, the better. We can ruin our credit in a matter of months, but it takes years to rebuild.

Credit Scores and Credit Utilization Ratios

You never know how important your credit score is until you’re making a major purchase.  Your credit score determines whether or not you qualify for that loan or financing; it also determines the interest rate you’ll be paying.

It’s a good idea to keep your credit use below 30% of your total available credit.  That is your credit utilization ratio, and it is calculated by dividing the total amount on all your credit cards by your total available credit. For instance, if you’ve got a $1000 credit card, you’d want to keep your balance below $300. If your credit utilization ratio is above 30%, this can hurt your credit score, as this is the second biggest factor affecting your score next to payment history.

Setting a Budget

It’s also important to keep an eye on your accounts and track your spending because it’s easy to find your account overdrawn if you’re not careful. The best thing to do is create a budget. It doesn’t have to be too complex, but some way for you to see how much money you’ve got coming in and how much money you’ve got going out, and when. With this information, you’ll be able to plan how to use your money more efficiently. Once you see where your money is going, it’ll be easier to fine-tune your spending and set financial goals.

There are a lot of resources online for information and tools you can use. With these financial management tools, you will easily be able to manage your money, manage your debt, and manage your credit.

A good method to follow is the 50/30/20 budget rule. That is 50% for essentials, 30% for personal spending, and 20% for savings and other financial goals.

Financial Literacy for Saving

Be sure to make savings a part of your monthly budget, no matter how small the amount. It’s important to keep your savings out of your checking account. Also, don’t confuse your wants with your needs.

An emergency fund is another good idea, but only dip into it in case of emergency, such as job-loss, medical emergencies, emergency home repairs, vehicle repairs and things of that nature.

It really is never too early to start saving for retirement, so try to get into a 401(k) program as soon as you can. Ask your employer or your bank about getting started, and they will walk you through your options. It’s also recommended that when you get a raise, increase your retirement savings, too.

Other Things to Know

Be aware of interest rates for credit cards, loans, and even savings accounts, as some are better than others.

A good method for tackling debt is to pay off smaller bills first and getting them out of the way. Follow that up by attacking your higher interest credit cards or loans.

It might also be a good idea to adopt a cash-only diet. This curbs spending and makes your money a lot easier to track.

On a final note, it can’t be stressed enough that the more you learn about financial literacy, the closer you will be to reaching your goals.

Call 757.858.8324 for more information on Tidewater Tech or visit

About Tidewater Tech

Tidewater Tech is a career training school that specializes in trade vocations including Auto Technician, Heating, Ventilation and Air Conditioning (HVAC), Building Maintenance and Repair and Welding. The school offers professional facilities, knowledgeable instructors, day or evening classes, job placement assistance, and is accredited by the Commission of the Council of Occupational Education (COE). Tidewater Tech is certified to Operate by SCHEV. Learn more at or like them on Facebook at

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