Studies have long shown that many Americans lack basic financial skills. For example, a Gallup poll found that 57 percent of U.S. adults are financially illiterate, meaning they do not understand concepts like compound interest, investing and saving.
Part of the problem is that many schools give brief, incomplete introductions to financial education, leaving students at a disadvantage when they graduate and enter the real world. In a country where three-quarters of families report living paycheck to paycheck, this is alarming. But April is National Financial Literacy Month, and there isn’t a better time to take stock of your finances and look for ways to improve your money management.
You should learn how to create and stick to a budget. Be sure to limit your monthly spending so that you can save enough spare cash for emergencies, as well as create a nest egg for the future. In addition, you’ll want to develop basic investing skills so you can grow your wealth without solely relying on your paychecks.
However, financial literacy isn’t just about making money. You would also be wise to learn more about protecting yourself from financial harm. These days, identity theft is a growing threat. According to a study by Javelin Strategy & Research, 12.7 million Americans experienced some kind of identity theft or credit card fraud in 2014. The consequences can be dire. Even if they are quick to report the theft, victims may lose money and suffer damage to their credit, which impacts their financial health in the long run.
The different methods of identity theft
There are many different paths that thieves can choose to commit identity theft.
• Tried-and-true stealing: If you lose your wallet, or if your mailbox is broken into, the stolen contents of each could allow someone to assume your identity. Even the loss of a single credit card could leave you with thousands of dollars in debt that you didn’t accrue.
• E-mail hacking: We often underestimate just how sensitive the contents of our email can be. But if you have any other online account (and let’s face it – most of us do), it’s probably connected to your email in some way. This means that thieves can access most, if not all, of your digital life through your email, which is likely protected with nothing more than a single password.
• Widespread data breach: Identity theft efforts that do not explicitly target you can still effect you. Criminals who want to earn a large haul attempt to hack into major databases, such as those used by the retail industry, or hospitals. Your information may be compromised in these instances, along with data belonging to thousands of other victims.
Keep your finances healthy by protecting yourself from ID theft
It’s important for people to understand the risks that identity theft poses to their finances. It’s also crucial to recognize that such crimes cannot always be prevented. We can secure our papers, strengthen our passwords and encrypt our digital life. But no matter how careful we are, the fact is that the modern world presents thieves with myriad opportunities to steal identities. Often, the best way to prepare for this eventuality is to create an adequate response.
An identity theft protection service like Identity Guard can help. By monitoring your credit, Social Security Number and public records, our service will alert you to certain activity in your credit file that may be indicative of fraud. With this knowledge, you can respond promptly, limiting the damage that identity theft may do to your finances.