You may have heard the term financial capability but have no clue what it means. If so, you aren’t alone.

 

The exact definition of financial capability will differ depending on who you ask. In general, it means having access to the financial services you need as well as the knowledge, skills and ability to act in your own best financial interests based on your circumstances. It’s so important that the Financial Literacy and Education Commission has deemed April Financial Capability Month.

 

If you’re just beginning to take control of your finances, becoming financially capable can sound overwhelming. Start with these three, simple-but-impactful steps to make a measurable difference to your financial empowerment.

 

1. Educate yourself

Learning about how to act in your own best financial interests is easier than you’d think. It’s a good idea to start learning by reading a general personal finance book. These books cover the basics of how to manage your money so you can get a big picture view.

 

If money is tight, you don’t even have to shell out any cash. You can check out many popular personal finance books from your local library and save a few bucks in the process. Here’s a list of some of our favorite personal finance books to read in 2018.

 

2. Make a budget

Once you understand the big picture of managing your personal finances, it’s time to start digging into the details. Many people view budgets as restrictive tools that limit their fun, but they don’t have to be fun busters.

 

Budgets do aim to limit spending in each major category, but you have complete control over how much money you allocate to each spending category. As Erin Lowry writes for US News, “Instead of dealing with the yo-yo of deprivation and excess, a “fun fund” helps both those in the red and in the black keep a level head and fuller wallet.”

 

If there are certain activities you don’t want to give up, find other places to cut back so you can afford to still have fun. If you don’t know how to start building a budget, we share exactly how you can build a budget in three easy steps.

 

3. Build a small emergency fund

According to the Federal Reserve, four in ten Americans either wouldn’t be able to come up with $400 for an unexpected expense or would have to take out a loan or sell something to come up with the money. If you’d have the same problem, you should seriously consider starting an emergency fund.

 

While many experts recommend building an emergency fund of three to six months of your monthly expenses, Dave Ramsey recommends starting with a $1,000 emergency fund. That said, even building a $1,000 emergency fund can be difficult. To learn more about emergency funds and how to start building yours, check out our post about what you need to know about emergency funds.

 

The road to financial capability

Improving your financial capability is an important key to improving your quality of life. RISE is dedicated to helping hardworking Americans build better money habits. Check out our collection of free, interactive tools for setting savings goals and managing debt.

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