The Importance of Financial Literacy in Preventing Homelessness

The Importance of Financial Literacy in Preventing Homelessness

September 6, 2024

According to Investopedia.com, financial literacy is “the ability to understand and effectively use various financial skills, including personal financial management, budgeting, and investing.” Financial literacy can empower individuals and families to manage their finances better, and have an all-around healthy and beneficial relationship with money. 

Disrupt Gives believes in giving everyone an equal chance at success, and that success starts with education. Having a strong understanding of your personal finances and knowing the ins and outs of maintaining financial success is essential to seeing your wallet and bank account thrive. Being financially literate can also prevent the pitfalls that having poor financial habits can lead to, such as unsustainable debt, the inability to save money, and ineffective spending. These pitfalls in turn can lead to bigger problems like poor credit, bankruptcy, and homelessness. 

Disrupt Gives works to combat homelessness by providing free personalized financial literacy training to promote financial independence, accountability, and to equip their applicants for long-term financial stability and success. Disrupt Gives’ financial literacy workshops are designed to educate individuals on budgeting, saving, credit management, and financial planning. These workshops provide practical skills and knowledge to empower participants to make informed financial decisions.

The topics covered by Disrupt Gives in their financial literacy workshops include the fundamentals of financial literacy such as: Understanding Credit Scores, Managing Debt, Creating A Budget, Setting Financial Goals, and Accessing Community Resources for Financial Assistance. Why are these topics fundamental? Let’s break them down.

Understanding Credit Scores

According to the Consumer Financial Protection Bureau (CFPB) a credit score is “a prediction of your credit behavior, such as how likely you are to pay a loan back on time, based on information from your credit reports.” Companies use credit scores to determine whether to offer you a credit card or loan, as well as screenings for apartments and insurance. Understanding your credit score, what impacts it, and how to improve it can boost your financial wellness. 

Managing Debt

When debt piles up it can seem like there is no hope. Too much debt can hamper your ability to pursue other financial goals. However, there are ways to manage debt effectively. Keeping track of all of your accounts, reviewing your credit report, debt consolidation, and budgeting are all ways that can help get debt under control.

Creating A Budget

Budgeting is crucial when managing your finances. Having a realistic and sturdy budget can make the world of a difference to your monetary goals. There are many types of budgeting techniques and the key is to find the one that works for you. One budgeting technique is the 50/30/20 Rule: 50% goes to needs like rent or groceries, 30% goes to wants like shopping and vacations, and 20% goes to savings like emergency funds and retirement.

Setting Financial Goals

Financial goals are essential to creating a financial plan that works. When setting financial goals it’s important to first establish what’s important to you. What can’t you live without? What are you aiming for? What works now and what do you want to change? From there you can build out a plan and set short-term and long-term goals that are tailored to you and your financial situation. 

Accessing Community Resources for Financial Assistance

Sometimes you can’t do it all by yourself. Knowing how to get financial assistance can make a real difference for families and individuals who are in a difficult financial situation. Each community has a variety of resources for financial assistance, however it’s not always easy to navigate. It’s important to know what types of financial assistance is available to you and what resources are available in your area. 

Financial Literacy is important. Understanding financial strategies and possessing the skills to stay on top of your finances can prevent hardships and financial downfalls. Knowing how to manage your finances can sometimes make the difference between having a home or not. Disrupt Gives is focused on preventing homelessness and promoting long-term financial stability by providing rental assistance to help individuals maintain stable housing, and equipping people with the necessary tools and knowledge for sustainable financial health. 

For more information on Disrupt Gives, and on how to sign up for their programs, please visit disruptgives.com.