PhotoPresident Obama has kicked off April by declaring it “Financial Capability Month,” with an emphasis on increasing financial literacy among consumers. The initiative stresses acquiring the tools to get ahead in today's economy.

But what tools do you need, exactly? At the very core, you need to know how to add and subtract. But everyone knows that, right?

If they do, why do we have so much consumer debt? You can add up all the income you have and subtract what you are spending, either in cash or on credit cards, and at the end of the month you had better come up with a positive number, not a negative one. We may have put our finger on the first rule of financial literacy – you must know how to manage debt, particularly credit cards.

Financial comic book

PhotoIn 2012, Visa partnered with Marvel Comics to produce a financial literacy comic book that teaches children basic personal finance skills. The comic book, launched with the spring 2012 Avengers movie release, is available in eight languages. According to Visa, more than 150,000 copies have been printed to date.

Visa says it also has financial literacy programs for adults. In 2012 it began conferences in various regions of the world to provide basic financial skills.

But knowing how to add and subtract income and expenses is only part of the equation. With that knowledge consumers need the discipline to spend no more than they make. It's very easy to put restaurant meals and movie tickets on your credit card, but you must have the discipline to pay for all of those items when the bill arrives and not let the balance accumulate.

A second building block of financial literacy is budgeting. This is where those math skills come in handy.


A budget spells out on paper how much money is coming in and where it is being spent. You start with the big things, like rent or mortgage, car payments and insurance. But you should also include even the small stuff, like bank fees and your Netflix account.

A budget should also include some savings, so that you'll have the funds to meet an emergency expense. You'll quickly see where your money goes each month.

A third basic is choosing a place to keep your money. A bank used to be the logical choice, but these days you had better choose the right one. Most banks now charge fees to let them hold onto your money for you. Those fees have to be considered expenses in your budget that you just drew up.

Carrington, of Orlando, Fla., writes that he's closing his BB&T account because of fees.

“I have never felt so ripped off by a bank!” he wrote in a post. “I did not even choose them, they bought out my old bank. I am closing my account with them ASAP. They're not worth it when there are so many banks in Florida to choose from.”

Small banks, fewer fees

Avoiding large national banks and even major regional banks will allow you to avoid the worst of the fees. If you bank at a credit union or small community bank, assuming you can find one, you should be able to hold onto more of your money.

PhotoKeep enough money in your account at all times so that you avoid unnecessary overdraft fees.

There are a few online-only institutions, like PerkStreet,  that offer free checking and debit cards. A ConsumerAffairs editor has had a PerkStreet account for the last year or so and says he has not only enjoyed free checking but has even made $100 or so in "perks," cash bonuses earned for certain types of spending. Unlike many banks, there is no minimum balance required.

A better, cheaper life

The object of financial literacy is to live a better life. With knowledge about money and how to manage it, you should be under less financial stress. An unexpected bill doesn't knock you for a loop and you'll have a little extra cash now and then for a treat.

But all of that requires living slightly below your means, and that's where lots of people fall short. They'd rather live slightly above their means and eventually, the numbers just don't add up.

Tracking your income and expenses, managing your credit card usage, sticking to a budget and not wasting money on bank fees are all part of the first step. That sets you up to start saving money, and that's how you can really get your financial life under control.

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