Let’s Use the Crypto Craze as a Springboard into Better Financial Literacy
Investing in cryptocurrencies has gotten a new segment of folks interested in finances. But why stop there? It’s a great opportunity for them to get a leg up with three important financial lessons.
From Super Bowl advertisements to big city mayors taking payment in crypto, it’s become impossible to ignore the rise of cryptocurrencies, the digital assets hailed by some as the future of finance. One in five Americans has traded in, invested in, or used cryptocurrency, according to a recent NBC News poll.
Cryptocurrencies, the decentralized financial assets built on the blockchain, are generating excitement and activity with new investors, from Baby Boomers to Gen Z. It’s also helped shine a much-needed spotlight on the general public’s need for finance knowledge.
The fact is, improving your financial literacy can have benefits beyond your pocketbook: Harvard researchers have found that increased financial literacy contributes to better mental and physical health and is associated with a lower risk of depression.
Subscribe to Kiplinger’s Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
If you’d like to improve your financial literacy, here are three important lessons to keep in mind:
Don’t let market volatility stress you out
Between rising inflation and interest rates and ongoing uncertainty around the war in Ukraine, financial markets have been on a roller coaster ride for the last few months. When your portfolio loses value quickly, it can be tempting to bail out of markets entirely. But don’t panic – carefully consider all available options, including staying diversified and not making major changes to your portfolio, especially for long-term investors.
Timing the market – knowing exactly when to get in and out to minimize losses and maximize potential gains – is nearly impossible, even for professional investors. During the ups and downs, it is key to remember that when you’re in it for the long haul, the day-to-day balances should not be a central focus.
Market volatility is a normal part of investing and should not prompt panic or sudden changes in your investments if you take a long-term approach.
Count on Your Community
Building your financial literacy can feel overwhelming if you don’t have a background in money topics – even if Dogecoin memes abound. But you may have access to resources that can help you get started. Programs in your local community can serve as a critical (and often overlooked) financial lifeline to individuals anxious about money and the future. You may find that you have more resources available to you than you realize.
Research what’s taking place in your town or city when it comes to financial education training or courses, especially at a local college or nonprofit organization. There are also resources like Financial Health Network that can help you on your financial literacy journey. Or you can turn to your financial adviser or workplace benefits provider for additional content or materials that can help you improve your financial education.
Conversation Starters – Talk About Money
While many of us have grown up learning that it’s taboo or impolite to talk about money, keeping quiet about your financial concerns or questions may have a negative impact. While it can feel awkward to talk about money at first, it gets easier over time.
It’s particularly important to be transparent and open with your partner about money, which can prevent financial conflict in the future. If you have children, make sure to include them in discussions about finances as well, because open conversations about finances can help them develop a healthy relationship with money as they grow older.
Outside of your personal financial education, seeking the advice and resources from online, virtual or in-person financial professionals can help reaffirm your learning and be a critical tool in starting, refreshing or maintaining your financial security.
While cryptocurrency may have sparked your interest in financial literacy, learning about the broader financial markets is a smart move. Once you have a better understanding of how money works, you can start putting actions and behaviors in place to improve or protect your financial situation.
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
Brad Hearn is the president of Retail Advice and Solutions, which brings together the extraordinary face-to-face advice expertise of Prudential Advisors with Prudential’s Hybrid Advisory team and digital advice capabilities – creating a single organization with end-to-end accountability for delivering holistic financial advice and solutions across the entire advice continuum.
Estimated Tax Payments Are Due Next Week
Tax Deadlines Here’s what you need to know about paying estimated taxes and avoiding penalties.
By Kelley R. Taylor • Published
Stock Market Today: Stocks Finish Mixed After Bank of Canada's Surprise Rate Hike
Canada's central bank unexpectedly lifted interest rates after pausing them earlier this year, boosting expectations for another Fed rate hike at next week's meeting.
By Karee Venema • Published
How to Make the Most of Your Bonus (and Other Variable Income)
Putting your focus on meeting your savings goals first can set you up to use the rest of your bonus or other variable income however you’d like, without guilt or worry.
By Eric Roberge, Certified Financial Planner (CFP) and Investment Adviser • Published
For Business Owners, Estate and Exit Planning Join Forces
Estate planning alone isn’t enough protection for business owners, who need to also consider succession plans as well as financial, legal and operational issues.
By Tom Kennedy, CFP® • Published
What Lawyers Often Fail to Tell Clients About Litigation
A client learns the hard way that litigation takes time and can get expensive, especially if the lawyer is piling on unethical fees and vague ‘costs.’
By H. Dennis Beaver, Esq. • Published
Buying a House Could Be the Best Investment You Ever Make
Homeownership is the largest source of wealth for many. If you're facing home-buying hurdles, real estate agents who are Realtors and certified housing counselors can help you get there.
By Kenny Parcell, ABR®, AHWD, CRS, C2EX • Published
Finding a Balance in Financial Planning: The Tale of Two Fathers
One father spent freely and didn't save, while the other obsessed over saving. Neither flourished in retirement. Here are four steps to avoid either scenario.
By Chuck Cavanaugh • Published
It’s Not Too Late to Save for Retirement: Five Ways to Step It Up
You’re not alone if you feel like time is running out for you to save, but taking advantage of workplace benefits, increasing the percentage of what you save and more can help.
By Kelly LaVigne, J.D. • Published
How Two Tax Laws Make REITs More Tax-Friendly
Taking advantage of the return of capital (ROC) and Tax Cuts and Jobs Act rate reductions can significantly reduce the taxes on REIT distributions.
By Michael Aloi, CFP® • Published
What Gen X Needs to Know About Their Aging Parents' Finances
These six steps can help future caregivers know where aging parents stand financially as well as help them to avoid surprises that could imperil their own retirement.
By Sara Stanich, CFP®, CDFA®, CEPA • Published