Economy 101

What is Financial Literacy? 

"Financial literacy" describes the skills, knowledge, and tools that equip people to make individual financial decisions and actions to attain their goals  

What is Financial Education? 

"Financial education" is the process by which people gain information, skills, confidence, and motivation to act on their financial decisions, through various means, including classroom education, one-on-one counseling and coaching, technology-based interventions, and self-study.  

What is Financial Health? 

The OCC considers financial health as a state which enables (1) stability in day-to-day finances, (2) financial resilience to handle adverse circumstances, and (3) financial security for the future. 

Did you know that Black families have significantly less wealth than the typical white family, a disparity rooted in historical and ongoing systemic inequalities?

What is generational wealth?  

Generational wealth encompasses any assets, like cash, investments, real estate, or businesses, that are passed down from one family generation to the next, aiming to provide long-term financial stability and opportunity.  

What is included in generational wealth?  

Cash, Investments (stocks, bonds, mutual funds, etc.), Retirement accounts (IRAs, 401(k)s), Real estate (property, rental properties), Business ownership, and Education.  

How do I start planning for my generational wealth?  

Schedule an appointment with a financial planner. Make sure to interview several different financial planners, until you are comfortable with the one you feel is best for your family.  

Did you know that most people don't budget their money, which leads to overspending?

What is a budget?  

Budgeting is the life skill of planning and managing your money. By understanding exactly where your money goes every month, you are empowered to create an actionable plan by which you can spend less 

How do I start a budget?  

The rule here is that money coming in (your total income) should always be greater than money going out (your total expenses). The difference between the two values is what you should be stashing away as savings. 

Recommended Budgeting Tools: 

• NerdWallet (Free Budget Template and Tips For Getting Started)
• USNews (9 Simple and Free Budgeting Tools)

Did you know that the average working-class person does not have a savings account?   

What is a savings account?  

A savings account is a type of bank account designed to hold money you aren't planning to spend immediately, offering a safe place to store funds and potentially earn interest. 

Why do I need a savings account?  

A savings account is a better way to handle unexpected emergencies versus paying with a credit card and subjecting yourself to interest.   

How do I choose a bank?  

Decide on your spending preferences for the money you're saving. Look at the interest rate, fees, minimum balance, and any penalties. Make sure to shop around for the best savings account that fits your needs.  

What are tariffs? 

A tariff is a tax a government imposes on imports (or sometimes exports) of goods.

How they work: 

When a business imports goods, it pays a tariff to the government, which is typically collected at the point of entry (customs).

 What are tariffs used for? 

• Tariffs are a source of income for the government. 
• They can make imported goods more expensive, incentivizing consumers to buy domestically produced goods. 
• They can be used as a tool in trade negotiations or to retaliate against trade barriers imposed by other countries, as seen in trade wars. 

How do tariffs impact a consumer? 

Tariffs typically lead to higher consumer prices as businesses pass on the increased costs of importing, potentially reducing the range of available products. For example, tariffs are taxes paid by importers such as large retail chains, which must pay the U.S. Customs and Border Protection fees when they accept shipments at American ports. As a result, U.S. businesses typically pass on most or all that cost to consumers through higher prices. Tariffs can also have broader economic consequences, potentially leading to inflation and economic downturns.

Tariffs typically lead to higher consumer prices as businesses pass on the increased costs of importing 

What can I do to prepare for higher prices?

Don't panic – plan! 

• Now's the time to consider any big-ticket items you may need in the next 12 to 18 months. Look for sales in the upcoming weeks (like Memorial Day) and purchase before prices increase. 
• Do not take out new credit cards with high interest rates. 
• Pay off high-interest-rate loans and credit cards. Using a 0% balance transfer credit card or low-interest personal loans to consolidate those debts and lower the interest can be a "huge first step" in tackling this problem. 
• If you can save, SAVE! The more discretionary income you have for emergencies, the better! 
• Reduce risky investments, but do not sell stocks or assets; instead, consult with a financial advisor on the best way forward.