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FinLit 101: The Basic Building Blocks of Financial Literacy

Updated: Nov 14, 2022

Financial literacy equips people with the knowledge and comprehension to make and manage financially responsible choices that are essential to everyday life.

According to, 23 U.S. states in 2022 require high school students to take a personal finance course to graduate, and 25 states require students to enroll in an economics course to graduate. Yet one-third of adults nationally reported they are just getting by financially.

Financial literacy is important because it equips us with the skills we need to manage our money and avoid many of the common financial pitfalls, like accumulating too much debt or not saving enough for retirement. So how do you start building a solid foundation of financial literacy? Your local credit union can be a great first-stop. They typically offer many educational resources to their membership and communities as well as helpful tools like financial calculators.

We've also put together a quick crash course below to help jumpstart your financial literacy journey.


A budget is an estimated spending plan based upon personal income and expenditures over a specific period of time, often monthly. The purpose of a budget is to plan for expenses, prepare for unexpected events that pop up in life and to afford wanted items without having to go into debt.

Although there are many different ways to create a budget based on what works for you, one of the favorite budget models cited by personal finance company NerdWallet is called the 50/30/20 budget. This model suggests spending approximately 50% of your monthly after-tax income on necessities, 30% on wants, and 20% on savings and paying off debt.

If you’re wondering exactly where to begin, has an easy budget worksheet that can help you get started.


Saving money takes both discipline and sacrifice, but it pays off — literally and figuratively — in the end. Saving money not only opens an avenue to building wealth and securing your financial future, but it also is a way to reach both short-term and long-term goals, whether that would be buying the latest gaming system or a new car.

In addition, saving provides peace of mind, helping ensure that when unforeseen or unfortunate events occur — as they always do — you are better protected from going into debt.

There are many ways to save money, many of which directly relate to the discussion above on budgeting, such as setting savings goals and determining your financial priorities. However, one of the most convenient ways of saving is with an automatic savings plan, such as the direct deposit of a portion of your paycheck into a specified savings account.

As noted by Investopedia, “An automatic savings plan can help you with budgeting and with managing spending habits, as you can’t spend money that has already been transferred into a separate account.”

Out of sight, out of mind.


Interest is a two-way street that can work for you or work against you.

In a nutshell, it is the price you pay to borrow money. Yet it can also be the reward you are paid for saving money.

With a savings account, your financial institution will contribute a percentage of your savings into the account. The higher the savings, the more money goes into the account.

On the borrowing side, interest is an additional charge for borrowing money. It is often associated with credit cards, mortgages, car loans, personal loans and penalty assessments.

The Balance, a website dedicated to simplifying personal finance topics and news, offered this example of how interest works: “If you take out a loan to buy a car, you’ll owe the amount of the loan (also called the ‘principal’), plus the interest charged by the lender. If your car loan is for $10,000 at 6% interest, you’ll have to repay the $10,000 as well as pay the lender 6% of $10,000 (which is $600), for a total of $10,600 altogether. Your lender will decide how long you have to repay this amount.”

Start today

Getting familiar and comfortable with financial management isn’t something that happens overnight. But with patience, practice and persistence, financial literacy becomes second nature — and before you know it, you’re making better monetary decisions without giving it a second thought.

At Ever Green 3C, a credit union service organization wholly owned by Reseda Group, we help credit unions establish better engagement, loyalty, and lifelong relationships with their members and communities through financial education solutions. For more information, visit



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