April is National Financial Capability Month. Whoa, whoa, whoa, pull up on the reins there, Tex! Isn't it supposed to be Financial Literacy Month? The Federal Financial Literacy and Education Commission says it's officially Financial Capability Month. So how financially capable are you?

Literacy Versus Capability

Financial literacy, say experts at Investopedia, is “the ability to understand and effectively use various financial skills, including personal financial management, budgeting, and investing.”

That doesn't seem to leave a lot of wiggle room for financial capability, but the National Financial Educators Council sees a big difference between literacy and capability. Financial capability is:

…the knowledge of how to best manage your money, the willingness to put that knowledge into practice, and the means to do so.

See the difference? Financial literacy is very much a by-the-numbers, cold-hard-cash way to view decisions. Financial capability goes beyond skills and knowledge to include motivation, attitude, and access to financial systems.

Trifecta

The three aspects of financial capability are:

1. Knowledge — The simplest part of the formula, learning how to manage your finances is nuts-and-bolts, by-the-numbers, workbooks-and-homework stuff
2. Willingness — Once you learn how to manage your money, you have to make tough choices and complex decisions; knowing how to save, invest, and spend wisely does not automatically lead you to do it!
3. Means — In this case, “means” does not imply a pile of cash; it is access to financial systems like bank accounts, online investment tools, a financial advisor, and a bankruptcy attorney

Let's knock these down 1-2-3. Smart Texans can learn financial literacy from many free resources, such as the Texas Office of Consumer Credit Commissioner or the Federal Reserve Bank of Dallas. If you choose a bankruptcy attorney wisely, your attorney can also connect you with debtor education tools.

Willingness to implement the tools and resources of financial literacy can only come from within you. What is holding you back? For many financially distressed Texans, debt is piling up from events beyond their control:

• You got laid off or had your hours cut back
• You face mounting medical bills
• You tried to help other family members with their credit crunch
• You recently divorced, married, or separated
• Your Adjustable-Rate Mortgage (ARM) skyrocketed up in its interest rate

Of the top five reasons people get into financial straits, Investopedia puts only one — overspending — squarely on you. So in most cases, the need to contact a bankruptcy attorney is not your fault.

We are conditioned, however, to feel that bad events in our lives are somehow our fault. And we feed that feeling with negative self-talk.

Self-Talk

Parents of school-age children often openly say in front of their kids, “I was never very good at mathematics,” but almost never say “I was never a good reader.” Our fast-paced society frowns on actual illiteracy but has no problem with the same idea in mathematics, innumeracy.

Then what do those kids grow up thinking? ‘My parents were bad at mathematics so I don't need to be good at it either.'

And the credit card companies, banks, lenders, mortgage companies, and con artists lick their lips, ready to pounce. Generation upon generation emerges financially illiterate and financially incapable of managing money. Texans fall victim to predatory credit practices, creditor harassment, and IRS wage garnishment.

Every Texan will benefit from stopping the negative self-talk and instead thinking positively about mathematics and money. Parents and kids will feel empowered by replacing all that harsh self-talk with other, better phrases:

• “Even though complicated formulas make me nervous, most money matters need only simple arithmetic.”
• “I'm still learning to be more comfortable with managing my money.”
• “This time last year, I was buried in debt but now I'm on the way to permanent relief thanks to partnering with my bankruptcy attorney.”

What Does ‘Means' Mean?

That third aspect of financial capability is by far the hardest one to attain. Not everybody has access to the complicated financial systems needed by the typical Texan to build credit, save money, and invest for retirement. Worse, not every Texan has the people needed to pull off financial capability:

• A financial advisor who has a fiduciary duty to you
• A tax accountant
• A bankruptcy attorney

Many working Texans are seduced into thinking they can handle their own investments and retirement through online brokerages and their employers. To some extent, that's true, but almost no working Texan is in a position to demand that their broker or employer have a fiduciary duty. Fiduciary duty is a legal term meaning the money manager is obligated by law to act in your best financial interest, not in the financial interest of the brokerage, bank, or employer.

Many Texans avail themselves of accountants only during tax season, since having an accountant year-round is pricey.

That leaves only the bankruptcy attorney as a reliable, available, helpful resource to connect you with the means to attain financial capability.

If you really have educated yourself in financial planning, investing, saving, and debt education, and if you have the willingness to fix financial problems, a bankruptcy attorney is your strongest ally in becoming financially capable.

April is National Financial Capability Month, and in the capable hands of The Page Law Firm, you can gain financial security, relief, and stability. Contact the Frisco office today or telephone 214-618-2101 to schedule an appointment right away.