How Does Financial Literacy Empower Divorce Recovery?
Guest Post by Louise Jackson, MBA
Before answering this question, let’s look at defining and understanding the meaning of Financial Literacy. It is the possession of a set of skills and knowledge which allows an individual to make an informed and effective decision with their financial resources.
Ask yourself, “How well do you understand and use personal finance information?” A combination of the following three elements makes up one’s personal finance information.
1. Financial Knowledge: Possessing awareness and understanding of important information needed to understand and apply personal finance concepts. (Examples: Learning about taxes, insurance, interest rates, stocks and a budget based upon your income and expenses.)
2. Financial Risk Tolerance: The willingness to engage in risky behavior that entails the possibility of a financial loss. (Example: You could be a millionaire but you may not feel safe putting your money in the stock market to take a chance of a loss so you choose to put it in a savings account Where you know it will earn a steady interest rate.)
3. Feelings of Control: The amount of control you feel you have when making financial decisions. (Example – Do you follow a tight budget each month, so you know where every penny goes, or do you just live by the seat of your pants and hope you have money at the end of the month to cover your expenses?)
The combination of these three elements defines financial literacy. You learn financial literacy through the many paths you take throughout life. When you are 20, you are not thinking about your retirement years. You learn with every change in life what you need, what you want, and how to make it happen. It might be a new job, growing family, going back to school, an inheritance, or a loss in life but it is a constant balance of these three elements of financial literacy.
Divorce is a huge life change and money plays a big role in the end of a marriage. One budget now becomes 2 and each party walks away with their own share to manage. Experiencing a divorce is very eye-opening with respect to financial wellness. It EMPOWERS one to take control of their own needs and wants and figure out a path to achieve financial goals. The three elements above become a focus as you pave the way to your financial RECOVERY and INDEPENDENCE.
Educating yourself leads to empowering yourself – you can do it and have fun!
About the author
Louise Jackson owns Good Grief Business Consulting LLC where she helps clients navigate the business side of life due to a loss. Louise received her undergraduate from St. Mary of the Woods College and an MBA from the University of St. Francis. She is currently an adjunct faculty teaching financial literacy for Ball State University.
