How's your financial literacy?
El Paso, Texas — Becoming financially literate is important if you care about securing your financial future, want to have more control over your work situation and when you can retire or pursue other options.
April is Financial Literacy Month. It was first recognized in the U.S. in April, 2004 as a way to promote the importance of knowing about money matters if you want to build wealth, reduce debt, retire early, or make sure your family's financially set should something happen to you.
Those who are the most financially literate can get rich.
For example, a Credit Suisse report last year estimated there are now about 22 million millionaires in the United States. 22 million represents nearly 9% of all adults in the U.S. and one-third of them are women.
Most American millionaires got rich the old fashioned way, by learning about the importance of steadily saving your money over years, in things like 401(k) retirement accounts, knowing how interest compounds over time and investing a good portion of your retirement savings in the stock market.
Many Americans don't realize that since its inception in 1926, the S&P 500 stock index has managed an average annual return of more than 10% and that's a time frame that includes periods like the Great Depression, which lasted through the 1930s and the Great Recession earlier this century.
If you had started putting $600 a month in an S&P 500 index account in 1990, which is the equivalent of a car payment for many people, and you invested that same amount every month since, your investment would have grown to nearly $1.1 million by the end of 2021.