Financial literacy month is a great time to review 5 key components of financial literacy.

1. The Basics of Budgeting. A budget is a great way to track money coming in and out of your finances. A budget can be created in several ways, one of the easiest is to use a spreadsheet like Excel or Google Sheets. Simply input your income and subtract your bills and miscellaneous payments. You should always have money left at the end of the month to allocate to savings, a retirement, or an emergency fund. Maintaining a budget is one of the most basic ways to stay on top of your finances.

2. Understanding Interest Rates. It is critical that you always review interest rates before agreeing to a financial contract, such as credit cards, and any type of loan. Be sure that the interest rate is competitive and fair. One of the best ways to ensure you receive a good interest rate is to be mindful of your credit score. Some of the ways you can improve your credit score is by paying your bills on time, and not taking on too much debt. As a general rule of thumb, most lenders require a debt-to-income ratio of less than 40% of your monthly income. For example, if you have monthly rent or mortgage of $1,000, a car payment of $250, and a student loan $150, and a gross monthly income of $4,500 your debt-to-income ration is 31%. ($1400 debt/ $4500 income). Your debt-to- income ratio and credit history will often determine your interest rate.

3. Prioritizing Saving. Once you have completed your budget and you can see where your money is going and how much is left at the end of the month you can begin to prioritize spending and make changes in order to have savings at the end of the month. Adding money to a rainy-day fund is a great way to avoid installment loans for when emergency situations arise.