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Financial literacy tips from the State Treasurer of Iowa

For people to become fully aware and financially literate, Treasurer Michael Fitzgerald believes parents need to teach the topic early in their children's lives.

DES MOINES, Iowa — April is National Financial Literacy Month

This year, one expert says being financially literate is more important than ever because as the price of goods continues to rise, people need to be careful of how much they're spending.

"There's a huge lack of understanding of finances," State Treasurer of Iowa Michael Fitgerald said.

For people to become fully aware and financially literate, he believes parents need to teach the topic early in their children's lives.

"Whether it's budgeting, or credit cards or savings for retirement or college or just a whole long list of issues."

Parents can start by giving kids a piggy bank and then helping them save towards a small item. Then as the child gets older, challenge them to save for college or trade school. 

"[They] need to become familiar with all the costs associated with living, transportation, education," Fitzgerald said.

He noted one of the most important things about literacy includes talking about credit cards and the debt that could follow.

Consumer debt has increased an average of two percent annually since 2010, according to Experian.

With the costs of goods rising, some people may need to use debt more than usual, but they still need to be smart about it. And only use it on essential items. 

"Credit cards in this day and age are very important …. But what people should [do], I like to tell them, make a commitment," Fitgerald said. "Each month pay it off, before you have to start paying interest."

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For people who do not need to use credit cards, Fitzgerald says to step away from it. You should also create a realistic budget and try to stick to it, because unnecessary purchases can turn into an out-of-control situation.

"If you finance everything with a credit card you're paying 20 percent interest," Fitzgerald said. "Weighing every time you buy something, is it important and what am I sacrificing, and if I have to borrow money to do it, that's a big red flag."

When it comes to paying back credit card debt, pay off ones that have the highest interest rates. Fitzgerald says you should consider getting a loan to pay off the credit card debt since loans typically have lower interest rates. 

More tips from the Iowa Treasurer's Office can be found here.

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