Personal Finance Tips for Successful Money Management

personal finance tips

Vince Shorb, CEO of the National Financial Educators Council, is responsible for leading the development of standards for financial educators, a framework for learners, and publishing financial literacy curriculum titles representing more than 400 hours of in-class presentations. Vince also led the creation of the first national speakers association for financial educators and a certification program that supports the effective dissemination of financial literacy information.

Here he discusses his philosophy on personal finance and ways consumers could improve their financial literacy.

Money Morning News Team: Tell us about the National Financial Educators Council...

Vince Shorb: The mission of the National Financial Educators Council is to help people gain the knowledge they need to make informed, qualified financial decisions that improve their lives. We accomplish this goal by providing financial education resources, promoting advocacy campaigns, and helping organizations build sustainable financial literacy initiatives.

The NFEC is an independent, for-profit financial literacy council with a social enterprise business model. This structure gives us the freedom to deliver unbiased financial education and effectively assist organizations in need of support.

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MMNT: What personal finance and investment principles or philosophies do you adhere to?

VS: Our core teaching programs are centered on helping people gain knowledge, build positive financial habits, enlist a trusted team of advisors, and undertake proactive long-term planning.

In regards to investing, we adhere to the philosophy that before entering into any investment you should have an overall investment plan that aligns with your financial goals and matches your risk tolerance. We recommend that people conduct due diligence on all investments they are considering and have an exit plan in place that addresses a variety of scenarios. Given the consistent change and volatility in the financial markets, an investment plan needs to be reviewed and adjusted on a regular basis.

MMNT: How has the curriculum for financial education evolved since you started with the council?

VS: Our curriculum has expanded from core financial education topics that help people make decisions about the money they have, to gaining comprehensive skill sets that can increase their earning power for the future. When people can earn more wages and successfully manage that money, they have a better chance of reaching a state of financial well-being.

We have coined the acronym FLEC to represent the subjects our financial literacy curriculum covers: financial literacy, entrepreneurship, and career education. Financial literacy education helps people acquire the knowledge and behavioral habits they need to make informed and qualified financial decisions, while entrepreneurship and career education provide the necessary skill sets to increase their lifetime earnings. FLEC subjects have a direct relationship with people's ability to earn and manage their money.

MMNT: What areas of financial literacy do you believe we need more education on? Where do we struggle the most?

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VS: People need more education on investing, yet they struggle even with the basic personal finance concepts that will help them get into a position to invest.

Finances have changed a lot in recent decades. Defined benefit pension plans have been decreasing steadily, and future reductions in Social Security are already planned. In today's financial landscape it is critical that people gain the skills and knowledge they need to invest for their futures.

Although the complexity of the financial markets underscores the need for increased education on investing, the areas with which the average person struggles most are basic subjects of savings and budgeting. The concept of budgeting is easy to understand and can be taught in a brief class, but too few people adopt the behaviors that allow them to stick within their savings plan.

Most people know how to budget so they can save money, yet a recent study by the Federal Reserve Board demonstrated that 47% of people who needed to pay for a hypothetical $400 emergency would cover the expense by borrowing or selling something, or simply be unable to come up with the $400 at all. This finding demonstrates that financial literacy is more than just education. A focus on behavior molding or modification should lie at the heart of any personal finance program.

MMNT: What's your view on the climate for investing today?

VS: The markets always offer potential rewards for those who are educated. Even volatile, tumbling markets provide opportunities for people who understand the risks, have money to invest, and the knowledge to capitalize.

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