Feeling good about your finances is a result of having good financial skills, a recent study from the Consumer Financial Protection Bureau (CFPB) found. And solid financial know-how comes from getting a financial education. Unfortunately, many Americans haven’t gotten a good financial education. The good news is, it’s never too late to learn.
The CFPB’s report looked at the ways that being savvy about how money and credit work influences consumers, and how folks can apply those financial skills to real-life situations in order to improve their financial well-being. They identified three key factors in making healthy financial decisions—and feeling good about money matters down the road.
Knowing what you don’t know
The first and most important factor is knowing when to seek out more information. Being aware of what they don’t know, and taking action to fill those gaps in knowledge, is a trait that financially successful people tend to share, according to the CFPB’s findings. Incomplete, one-sided, or unbalanced information can be problematic, as can following advice from an unreliable source.
Knowing where to go
The second thing that people with good financial well-being do is go to trustworthy sources to find information. When seeking out advice or information, they know where to go—and where not to. The CFPB and other government agencies are often the most unbiased sources, and other good bets include schools, libraries, and banks. If someone is trying to sell you a particular product or service, they might not be the most reliable place to get information.
Knowing what to do
Once they have good information from a credible source, the next step is knowing how to act on a financial decision. For example, if someone with a lot of consumer credit card debt at a high interest rate wants to transfer their balance to a low-interest card, or do a balance transfer to a zero APR card, they need to know the steps involved in doing so. Transferring a balance is not complicated, and there are many good balance transfer credit cards available, but there are certain things to be aware of when making a transfer.
