Thriving Together Series

Thriving Together Series: Financial Literacy

By: Shannon Osborne, Sally Richards, and Emely Melendez from the Financial Well-Being Team at the Student Support and Advocacy Center

“A penny saved is a penny earned.” – Benjamin Franklin

Financial literacy impacts every aspect of our daily lives and helps us maintain financial well-being. Learning how to manage money well frees us from unnecessary stress and helps us develop healthy habits, so we can thrive.

Since 2004, Americans have observed Financial Literacy Month in April. This a time when all of us can focus on our financial well-being – by annually reviewing our personal finances and revisiting our financial plan for the long-term future.

What is Financial Literacy?

Financial literacy is defined as the “ability to understand and effectively use various financial skills, including personal money management, budgeting, and investing.” Considered a lifelong learning journey, financial literacy is “critical for understanding how to save, earn, borrow, invest, and protect your money wisely.”

There are generally five principles of financial literacy: 

  1. Earn: Understanding your paycheck and other sources of income
  2. Spend: Creating a personal budget
  3. Save, Invest, and Give: Determining your financial goals
  4. Borrow: Utilizing credit cards, mortgages and loans, and monitoring your credit score
  5. Protect: Preventing fraud and buying insurance

Research indicates that high school students who study financial literacy show more informed behavior around college financing; however, only 23 U.S. states require courses before graduation.

What is Financial Well-Being?

Financial well-being is the sense of having financial security and balance in your life. It is the feeling of having financial freedom to plan for today, tomorrow, and the future. It can be accomplished with personal discipline and sticking to a financial plan. 

Who Needs to Focus on Financial Literacy and Financial Well-Being?

All of us do! Each year since 2013, the Federal Reserve Board of Governors has conducted a survey of U.S. household economics and decision-making to gain insights into the financial well-being of consumers. According to reports from the Federal Reserve, 75 percent of American adults surveyed – across all income levels – were either doing okay or living comfortably financially, most likely due to the U.S. economic expansion between 2017 and 2019 and lowering unemployment rates. However, 63 percent of those adults in 2019 rated their local economic conditions as good or excellent, with 37 percent rating their local economic conditions as poor or only fair. After the onset of the COVID-19 pandemic in 2020, which presented a financial challenge outside of people’s control, 6 percent of American adults surveyed faced reduced hours of employment and 13 percent lost their jobs. While we cannot always predict a change in circumstances that can negatively affect our financial well-being, we can lessen the impact by expanding our financial literacy education and by exercising good financial planning.

Why Does Financial Well-Being Matter?

Financial well-being makes good economic sense: financially stronger individuals make for financially stronger families, and financially stronger families make for financially stronger communities. In turn, with financially stronger communities, our schools benefit and our students become better prepared financially as adults. From looking at student loan debt, researchers at the Urban Institute in Washington, D.C. identified that 57 percent of students who are taking out student loans reported that they are concerned about their ability to repay their debt. While it is a hopeful sign that a large number of students are focused on their finances, this statistic also shows that the remaining 43 percent of students are not concerned about finances and debt. The Student Support and Advocacy Center hopes to change that statistic through the programs and activities offered during Financial Literacy Month and through our continuing Money Talks Series workshops, sponsored by our Financial Well-Being Team.

What are the Steps to Achieving Financial Well-Being?

Education is the key. Identify available tools and resources, and learn ways to implement those tools to achieve financial well-being.

The first step is to develop a financial plan, which requires an understanding of some key terms, particularly for students:

  • Budget: a spending plan that outlines the money you expect to earn or receive (your income) and your expected expenses. It helps you track your spending and saving activities for a given period.
  • Credit: the ability to borrow money or access goods or services with the understanding that you will pay for these items later. However, there exercise caution, because is usually subject to interest and/or additional costs such as annual fees.
  • Direct Costs (in education): expenses that are directly related to your education (tuition and fees).
  • Indirect Costs (in education): expenses that are indirectly related to your education and are expenses which are incurred generally from being a student (e.g., books, room and board, personal expenses, and transportation).

There are several different strategies to develop a budget:

  1. The “50/20/20/10” plan earmarks spending into four categories: 50 percent needs, 20 percent wants, 20 percent debt, and 10 percent savings.
  2. Another popular approach is a “50/30/20” plan, which breaks down spending into three categories: 50 percent essentials, 30 percent nonessentials, and 20 percent savings.
  3. The zero-based budget plan uses the prior month’s earnings to pay for things in the current month. The idea is that every dollar earned is designated for a specific item, so at the end of the current month, you end up with zero dollars.
  4. The envelope system is a manual approach, which is helpful mostly for people who have a hard time sticking to a budget. The idea is that every time you get paid, you take out cash and allocate it to separate envelopes that are labeled according to your budget categories; and once an envelope/category runs out of cash, then that is it for the month.

There are also tools available such as digital apps that help with budgeting, e.g., Mint, PocketGuard, YNAB, Wally, Goodbudget, Simple, BUDGT, Mvelopes, and Unsplurge. Each of these approaches is designed to structure finances in a way that is useful and realistic to the individual, and some can sync to a bank account. You will be more successful if you use a budget tool that works for you and your lifestyle, whether a manual ledger that allows for daily entries or an app that tracks daily/weekly expenditures.

The second step to financial well-being is to make a list of short-term and long-term goals. While goals may change over time, adopting a list that is flexible will help you maintain financial well-being.

Common Short-Term Budget Goals

Make a budget: Identify income and expenses. Your goal is to have money left over after you subract your expenses from your income.

Improve your credit score: Make payments on all of your credit cards and loan commitments on time to establish a positive credit history. Open and use only credit cards with a manageable credit limit and which offer rewards. Find cards with no or low annual fees and pay them off in full each month. 

Pay for education: Submit FAFSA by January 15 each year to qualify for all aid possible,  which includes federal direct loans, grants, and some scholarships. Find a work-study position, if possible. Apply for Mason scholarships. Apply for outside private scholarships through Keep in mind that federal loans have a lower interest rate than private loans, and payment is deferred while the student is enrolled at least on a part-time basis.

Student loan repayment: Log into your account at to identify what your loan payment will be so that you can budget accordingly. You can also access the online calculator system, learn who your servicer is, and become familiar with your total borrowed amount. 

Common Long-Term Budget Goals

Paying for a car/house: This process begins with establishing your credit. If you currently rent, make sure you pay your monthly rent on time. It is good to track your monthly payments and obtain an annual payment schedule from the landlord to show your payment dependability and consistency. Set yourself up for success by sticking to a budget and not signing up for a greater financial commitment on a car or house than you can afford.

Establishing an emergency fund: If there is money left over in your budget on a monthly basis, it is good practice to set aside even a small amount of $5 a month in an interest-bearing account as a rainy day fund.This fund can grow over time and be available when needed for a major expense.

Investing: Start small and invest in companies/properties that you identify as successful or think will become successful. Investing requires patience since your financial return builds up over time. Earnings from investments can be withdrawn later for larger purchases, but be mindful of any tax implications. 

Test your Financial Literacy through this Quiz

  1. Suppose you have $100 in a savings account earning 2% interest a year. After 5 years, how much would you have?: More than $102     Exactly $102            Less than $102       Don’t know
  2. Imagine that the interest rate on your savings account is 1% a year and inflation is 2% a year. After 1 year, would the money in the account buy more than it does today, exactly the same, or less than today?: More than today    Exactly the same    Less than today
  3. If interest rates rise, what will typically happen to bond prices?: Rise                 Fall                  Stay the same                      There is no relationship
  4. True or false: A 15-year mortgage typically requires higher monthly payments than a 30-year mortgage, but the total interest over the life of the loan will be less.
  5. True or false: Buying a single company’s stock usually provides a safer return than a stock mutual fund.

To check out the answers, click here.

Additional Resources

The Student Support and Advocacy Center’s Financial Well-Being Team offers a variety of financial services for students. The goal of SSAC is to help educate students about their finances and their options for achieving financial well-being. Services include one-on-one consultations as well as financial well-being workshops and events. Check out SSAC’s financial well-being resources and educational services. To make an appointment to meet with a member of SSAC’s Financial Well-Being Team,  students should submit a request for support at

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