What You Don't Know Can Hurt You
Recently a friend told me she was never good with finances and never really cared until the day she wanted to buy a home and discovered she didn’t qualify for a mortgage. For her, it was a great wakeup call, and she got up to speed pretty quickly. About a year later, she moved into her condo. Today, she not only knows all her financial statistics, but she tracks them regularly.
So just what are these numbers we should know, and why are they important? As you plan for your future, these vital financial statistics will show you where your finances are healthy and also the areas where your finances need improvement. If your life plan includes buying a home, putting your kids through college, or retiring early, these numbers will be the guideposts along your path.
What exactly is a credit score? It a snapshot of an individual’s entire credit history translated into a numeric value. This number is used by lenders to help them determine if you are creditworthy. The score is calculated by FICO (Fair Isacc Corporation) using data provided by the three credit reporting bureaus, Experian, Transunion, and Equifax. In addition to your FICO Score, another commonly used is a Vantage Score.
You must gain control over your money, or the lack of it will forever control you. - Dave Ramsey
For some of us, taking control of our finances is a challenge. One crucial element of the process is saving money. Americans are not very good savers. According to Bankrate, 58 percent of us have less than $1000 in savings.
Many of us are in that 58 percent because saving was not a habit we learned as children, but it is one we can embrace as adults. We can develop and nurture positive saving habits with the right motivation and inspiration.
Do not save what is left after spending, but spend what is left after saving. – Warren Buffet
If you have a 401K benefit with a company match from your employer, make sure you have the maximum amount deducted from your paycheck to take full advantage of the matching funds. Your 401K should be one of the significant elements of your retirement savings. The added...
Use a Budget to Control Your Money
When we gain control over our finances, lots of positive outcomes will follow. The door to new opportunities will open to us, and we will have more lifestyle choices to consider. How exactly do we control our money? We set financial goals, and then we monitor our spending, keep a limit on debt, save regularly, and invest wisely to achieve those goals. The very first step on the journey is following a budget.
A Budget is Powerful
A budget is a map we follow on the road to establishing a positive relationship with our money. With a budget, we can better plan how to spend if we know how much we have left after we pay all the bills. When we have a snapshot of our spending habits, we will be more likely to use discrimination in our purchases.
We need a budget because it is critical to keep our financial house in order as we build our future. Budgeting can help you rent and furnish your first apartment, or buy your first home, take a vacation, and begin planning for retirement. (Honestly, it’s never too soon) That is powerful stuff!
We all need a tool to keep track of income and expenses because it’s critical to know where our money goes every month. There is a richness of apps available to help you monitor your finances, such as ...