Financially literacy is incredibly important. I’ve dedicated my life’s work to it. But what if I told you that financial literacy isn’t enough? I know I was shocked when I learned the same thing. It turns out that financial literacy will only take you so far. For you to have true financial success, you need to have financial capability.
What’s the difference?
When you’re financially literate, you have an understanding of how money works – how to earn it, manage it, invest it, etc. and technically you have the skills and knowledge to make financial decisions.
When you’re financially capable, you also have the confidence, attitude, and self-efficacy to act on this knowledge. Basically, when you’re financially capable, you believe in yourself.
You believe that you know enough to make a decision OR that you know enough to know when you ask for help AND you believe that it’s worth your time and there is value to managing your money proactively. Yeah. I know this sounds likes a big challenge. But here’s why financial capability is way less scary than it sounds. With financial literacy, it can sometimes feel like you need to know everything before you make a move. With financial capability, you have the permission to learn and make mistakes as you go along.
If you’re financially capable, it’s okay to stumble through some things and not know it all, because you have the confidence to make course corrections along the way.
Here are some moves you can make this week to get closer to becoming financially capable:
Find a New Bank if You’ve Cursed Their Name More Than Twice This Year
You should never let any company treat you like crap, especially a company that uses your money to make money. Regardless of your balance, you shouldn’t be subject to hidden charges, unexpected fees, and sub-par customer service. There are too many other banks who will gladly hold your money and treat you with respect for it.
How to Do This?
First, choose a new bank. There are a number of online banks that are fantastic, including:
- Ally Bank
- Charles Schwab (Note they check your credit score)
- Simple (Note they don’t have a joint account option)
All have no monthly fees, no minimum balances, free checks, and great customer service. The only drawbacks with online banks are you can’t deposit cash and you can’t talk to someone in person. If you can’t remember needing to do either of those things with your current bank, make the switch!
Also check out local banks in your area. They usually have great banking products and are some of the friendliest people you’ll meet! Once you open your new account, make a list of all direct deposits and payments to switch over. Close your old account and make sure you get it in writing.
Now bask in the glory of your new bank!
Get your monthly cable/internet/phone bill lowered
Cable/internet/phone companies have entire departments dedicated to making sure you don’t cancel your service. They can extend promotional rates, find new packages for you, and find special discounts you wouldn’t have access to online. It’s always worth the call. If you have other providers in the area, research their rates and promotional packages so you have some comparison numbers.
How to Do This?
Call your cable company and tell them you are considering canceling your service. They will most likely transfer you to the cancellation department, which is where the real negotiating will begin.
Tell them you’ve noticed you rate has gone up since you first started and you’re considering switching providers or canceling one or more of your services. See what they come up with for you because they want to keep your business.
Open a Savings Account and Set up $25-$50/Month Auto Transfer.
You may or may not have heard the money mantra, “Pay Yourself First.” It’s a good rule to live by, and this is the easiest way to start doing it. Paying yourself first is important because you’re telling yourself that your future self is just as important as your present self.
I know a lot of folks who get it into their heads that they will start saving money when they get a big chunk to put into savings. That’s like saying you’ll start losing weight after you lose a bunch of weight. Building up savings takes practice, and it is a habit that needs to be formed and nurtured. It doesn’t matter how much you start with, as long as you can do it consistently.
How to Do This?
Open a savings account that is separate from your current bank where your checking account is. I recommend Ally Bank or CapitalOne360. Both are great online banks that offer higher interest rates than big banks and don’t charge monthly fees or require minimum balances. You can also set up your auto transfers as often as weekly to help you really budget your savings.
Get Fees Reversed From Your Bank or Credit Card
Making a call like this is a great way to learn how to advocate for yourself. We know that most of the fees that get charged by banks or credit card companies are arbitrary and often, they just like to see what they can get away with. Even if the fee seems like a small number, this is a phone call where you have very little to lose on the financial side, and a lot to gain when it comes to feeling empowered to handle your money.
Usually, banks will reverse some overdraft fees or unexpected monthly charge (because you dipped below a balance) and credit card companies will reverse late charges, so if you’ve been charged any of these in the last month or two, it’s time to make the call.
How to Do This?
There are two ways to approach it:
- Gain sympathy with the customer service rep and this works especially well if the mistake was yours, like if you missed the due date on a credit card payment and were charged a late charge.
I usually tell them I made a mistake and ask for forgiveness. 99 times out of 100, they will be able to reverse some or all of the charge.
- Surprised indignation. Ask the customer service rep very pointed questions about why a charge was made since you it was the first time you’ve seen it, was told the account was free, was told you had a grace period, whatever reason you can give that would justify them reversing the fee.
Treat it all like an experiment.
Pick one or two and don’t have any expectations about how any of it will turn out. Being financially capable means you also know that you can’t fail at finances. Instead, you learn new information and move forward with it more confidently.