When it comes to personal finance, saying is believing




WASHINGTON — What’s your character of learning?

Me, I’m a written learner. we adore words. we adore lectures.

The approach we learn works good when I’m reading a book on personal financial or attending an investment seminar.

But what if your training character is visual?

A visible tyro absorbs information improved if there are pictures, graphs, charts or diagrams. You substantially get mislaid flattering fast in a unenlightened vernacular of income management.

It’s quite useful to know your training character when it comes to personal finance, since so most of it can give we a headache. It’s complicated.

GoBankingRates.com conducted a consult progressing this year to exam people’s believe of financial terms and concepts. Survey participants were quizzed on how to establish one’s net worth, how a 401(k) works, and what terms like “CD” and “HELOC” mount for.

The site also posted an laughable video patrician “Do You Know Your Money?” that showed immature adults struggling to answer simple financial questions. (You can find a video here.)

Here are some examples of what they said:

Q. What does a “SP” mount for?

A. “Spending and payment,” one immature lady answered.

Q. At what age can we start collecting Social Security?

A. “Is 34 an option?” one man replied.

Their answers were laughable and nonetheless a small worrisome, since not meaningful this things can lead to bad financial decisions that cost we genuine money. And, that’s not lovable or funny.

For example, a GoBankingRates consult found that roughly 40 percent of respondents couldn’t report a 401(k), with some meditative it was a taxation credit for retirement. At slightest they were in a ballpark. It’s an critical resources car for retirement — and not adequate people are investing adequate income in these accounts.

Most respondents 45 and comparison answered rightly that a CD is a certificate of deposit, though usually 36 percent of 18- to 24-year-olds got a doubt right.

Net value stumped a lot of people. Only 59 percent of folks knew it’s a value of what we possess reduction what we owe. A lot of respondents suspicion it was income after taxes. Your net value is a good barometer of how you’re doing financially overall. When we accommodate with folks to go over their finances, it’s a initial thing we do. Because people wrongly consider their income tells a story of how good they’re doing.

Twenty-two percent of respondents suspicion a HELOC — or home equity line of credit — was a made-up term. It’s a genuine approach to steal money.

I spend a lot of time with financial education advocates, and we’re always debating since some people measure so feeble on these forms of tests. we consider it’s since mostly a approach personal financial is taught is too technical. It’s too dense.

If we wish people to be improved informed, we have to accommodate them where they are and tailor training techniques to best fit several training styles. For a visible learners, for example, we’ve got to emanate element that’s visually engaging. If this is your style, afterwards you’ll like my choice for this month’s Color of Money Book Club. It’s “The Infographic Guide to Personal Finance” ($16.99, Adams Media) by Michele Cagan and Elisabeth Lariviere.

Cagan is a approved open accountant (the income person) and Lariviere is an artist and designer.

Throughout this anxiety beam are bold, colorful illustrations covering budgeting, saving, spending, debt, credit, investing and housing.

Not certain how a bill works?

Apply a 50-30-20 rule, Cagan suggests, regulating buckets to illustrate a point. In one bucket are your “needs,” that make adult 50 percent of your expenses. These necessities embody such things as housing, food and medical costs. In a “wants” bucket, that accounts for 30 percent, we have clothing, vacations, eating out and entertainment. The remaining 20 percent pail is earmarked for your puncture fund, retirement resources and additional debt payments.

Confused by how to calculate your net worth? The book’s striking of resources and liabilities creates it easy to understand. “Smart income strategies — like profitable down debt and saving for retirement — send your net value aloft and beef adult your financial fitness. Imprudent moves, like selling sprees and ballooning credit label debt, can put your net value on life support,” Cagan writes.

If you’re looking for a approach to deliver financial concepts to a immature adult, this book will do a trick. It doesn’t condescend them, it simply delivers a tough subject in graphically appealing, eatable bites.

Michelle Singletary can be reached during michelle.singletary@washpost.com. Follow her on Twitter @SingletaryM.

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