Financial Literacy: What It Is and Why It’s So Important

April 8, 2022 | by Katie Claflin

Categories: Financial Education, Housing Counseling

April is National Financial Literacy Month, and we're using this opportunity to spotlight resources that can help families and individuals monitor and improve their financial health.

To fully understand the importance of financial literacy, it helps to first define it. Definitions vary slightly, but the most literal definition is simply "understanding the topic of money." In other words, to be financially literate is to be savvy in a variety of money-related topics, such as saving, investing, credit and debt. The National Financial Educators Council (NFEC) has created a complimentary online test to help consumers gauge their money smarts.

However, the NFEC stresses that, despite its importance, financial literacy alone does not guarantee financial health. There are other factors that influence someone's overall financial position, such as their sentiment (or attitude) about money and their financial behavior. But ultimately, financial health starts with one step.

Step One: Create a Budget

Experts (such as those quoted in this CNBC article) agree that the first step to overall financial wellness is creating a budget. Without a budget, it's nearly impossible to determine how much you are spending in relation to how much money you are bringing in. Knowing where your money goes will also help you plan and save for long-term goals and expenses, such as purchasing a home.

There are several credible online resources to help you create a budget, which you can find here.

TSAHC's Commitment to Financial Literacy

TSAHC recognizes that both financial literacy and overall financial well-being are inextricably linked to housing stability. Without it, tenants may struggle to pay rent, and homeowners may fall behind on their mortgage, property taxes or home repairs. We therefore created several resources to connect consumers with trained nonprofit housing counselors who can help them improve their financial situation.

• Texas Financial Toolbox: this online resource connects consumers with local nonprofits that provide home buyer education, financial and credit counseling, and foreclosure prevention counseling.
• Housing Connection: this is TSAHC's training program for housing and financial counselors to help them provide the best possible guidance to consumers at little or no cost.
• Texas Foundations Fund: this is TSAHC's grant program for local housing nonprofits. TSAHC recently expanded the guidelines to include funding specifically for housing and financial counseling services.

For households that are ready to buy a home, TSAHC also offers down payment assistance and mortgage interest tax credits. To learn more about these programs, visit www.readytobuyatexashome.com. 

---

On the House blog posts are meant to provide general information on various housing-related issues, research and programs. We are not liable for any errors or inaccuracies in the information provided by blog sources. Furthermore, this blog is not legal advice and should not be used as a substitute for legal advice from a licensed professional attorney.