6 Signs You’re More Financially Savvy Than the Average American
There’s no magic formula to being financially savvy. It’s mostly a matter of planning, common sense, commitment and math. People who are financially savvy focus on preparing for the future and managing their money in a way that builds wealth.
Check Out: The Best Banks of 2024
Next: Use This Checklist To See Whether Your Bank is Costing You a Lot of Money
So how do you stack up? Are you savvier than the average American? Here’s a look at some signs you’re on the right path:
1. You Seek Out the Highest Interest Rates
It doesn’t take much effort to find the best savings account interest rates — a simple internet search will deliver all the info you need. Even so, a lot of U.S. consumers settle for rates as low as 0.01% APY when they could score rates above 5.0% APY.
Financially savvy people put their money into savings accounts like the one offered by Jenius Bank. The Jenius Savings account has a 5.10% APY¹ — 11 times the national average ². There’s no minimum-balance requirement when you save with Jenius Bank, and all deposits are insured by the FDIC up to $250,000.³
And Jenius Bank doesn’t charge fees on its savings account, so you’ll keep all your well-deserved earnings. Sign up for an account here to earn 5.10% APY on your savings.
2. You Take the Time to Plan and Budget
Making a financial plan and establishing a monthly budget might be the two most important traits of financially savvy people. Your financial plan should encompass both long- and short-term goals and include everything from leisure activities and investment goals to major purchases such as a house or car, according to a blog from Robert Gordon & Associates, an Illinois-based investment management firm.
In contrast, your budget should center on current living expenses and day-to-day items. Here are six steps you can take to make sure you set the right budget and stick to it.
Step 1: List all your living expenses.
Step 2: List flexible and recurring expenses and loan payments.
Step 3: Add up your after-tax income.
Step 4: Set financial goals.
Step 5: Record and track your spending.
Step 6: Adjust and review your budget for growth.
3. You Seek Financial Advice from the Right People
Nobody is born financially savvy, and nobody who becomes financially savvy ever has it all figured out. You need to keep aiming for ways to learn more — and that means seeking advice from people with expertise you might lack.
It’s important to consult with professional financial advisors who can recommend steps and investments to help you reach your goals.
4. You Steer Clear of Unnecessary Debt
One thing financially savvy people have in common is that they don’t bury themselves under a mountain of debt they can’t afford to pay off. The road to financial ruin often begins with maxing out your credit cards to buy stuff you couldn’t otherwise afford.
This leads to a vicious cycle in which you pay the minimum on your debt each month to free up extra cash for essential bills, which racks up additional interest and makes it even harder to climb out of debt.
5. You Find Other Income Streams
Being financially savvy isn’t only about spending and budgeting wisely; it also means figuring out how to earn extra money beyond just the paycheck from your primary job. This can come in many different forms.
One of the most popular ways to build wealth is to put a certain percentage of your income into investments such as stocks, bonds, mutual funds and real estate. You can also earn extra income through part-time jobs and side hustles that turn your free time into a source of wealth.
6. You Don’t Waste Money on Impulse Buys or Luxuries
Wasting money ranks alongside piling up debt on the list of things financially savvy people don’t do. The average American spends $18,000 a year on nonessentials. Part of that spending goes toward luxury items — which says a lot about why the global luxury-goods market hit $1.45 trillion as recently as 2022. Meanwhile, U.S. consumers average nearly $3,800 a year on impulse buys they can probably live without.
Bottom Line
Being financially savvy isn’t something that just happens. It’s the result of hard work, a thirst for knowledge and dedication to making good decisions. Employ some of these tips today to become that much more financially savvy.
Jenius Bank is a division of SMBC MANUBANK. Member FDIC.
¹ Annual Percentage Yield (APY) as of 12/22/2023 and subject to change at any time.
² The national average rate is accurate as of 12/18/2023 from the FDIC National Rates and Rate Caps for Savings deposit products.
³ FDIC Insurance up to the maximum allowed by law. Deposits at Jenius Bank and SMBC MANUBANK are combined for the purpose of calculating FDIC insurance limits.
More From GOBankingRates
I'm a Bank Teller: Here Are 10 Mistakes You Are Making With Your Banking
Use This Checklist To See Whether Your Bank is Costing You a Lot of Money
This article originally appeared on GOBankingRates.com: 6 Signs You’re More Financially Savvy Than the Average American
