Build & Maintain Financial Stability with the Following Tips!
Hello and welcome back to Your Weekly Update, your source for information that impacts your health and your wallet. This week we are going to discuss some steps you can take to improve your financial hygiene. Developing healthy financial habits might seem daunting, so we broke it down for you into three steps:
- Create a savings plan for emergencies. Aim to save at least $1,000. It’s ideal to save between 10-30% of each paycheck. The more you can tuck away, the better!
- Create (and stick to) a budget! Look over your previous bank statements and identify how much you spend on what per month. Differentiate between necessary and unnecessary expenses and change your habits accordingly. Tip: Use apps/technology to help you stick to your budget! Check out “Mint”, the app that comprehensively monitors your money flow and creates categories based on your specific spending habits. The app automatically generates charts and graphs to enable you to visualize where exactly your money is going. It’s like FitBit for your wallet!
- Build & maintain your credit. Building a strong credit history is useful in every aspect of your life. Whether you’re trying to purchase a house or reserve a rental car, having a positive credit history is incredibly beneficial. FICO considers 740-850 to be “excellent” credit.
Credit 101 – Keep Reading to Learn How to Elevate your Score!
- Review your credit report once a year. It’s essential that you monitor your credit report to be able to quickly dispute inaccuracies should they occur. It is information that greatly impacts your life, so you need to be informed. You are entitled to a free copy of your credit report from Equifax, Experian, and Transunion every year. The only official way to request free reports is through visiting annualcreditreport.com or calling 1-877-322-8228. Beware of websites that falsely advertise free credit reports to lure you in. Many unethical sites prey on the unaware by charging you for what you could get for free, or by sneakily enrolling you in monthly subscriptions to their services.
- Make your payments early or on time, every time. You want your credit report to show that you fulfill your financial obligations in a timely manner. Be proactive! Consider setting up automatic payments if you’re forgetful. Set reminders on your phone before the payment goes through to prevent an overdraft.
- Aim to pay double or triple the minimum required. Paying more than the minimum will boost your credit and pay down your debt faster. Sticking with the minimum payment doesn’t help to lessen your credit utilization rate, another important factor that impacts your score.
- Ensure that your credit utilization ratio (the percentage of your credit line being used) is as low as possible, in general and for individual accounts. You should ideally use under 30% of your credit to avoid harming your score.
- DO NOT APPLY for multiple credit accounts within a short period of time. Each time you apply for any form of credit, the issuer will check your report to inform their decision. Each credit inquiry negatively impacts your score. Space out applications by at least six months to avoid this.
- Starting out with zero credit? Open a secured credit card that reports to the 3 main credit bureaus to establish a positive history. A secured card requires a cash collateral deposit to open. Use it with great responsibility by following the above tips, and your score will increase.
I hope that this information sets you on the path to financial health. Feel free to leave your own tips below in the comments, I’d love to see what you have to say! Thank you so much for your time. Until next week!