Managing your personal finances doesn’t have to be a burden, nor take a ton of time.
A. Use technology to your advantage.
- There are many budgeting apps, such as Mint or Simple, that can automatically update your budget when linked to your financial accounts. Use these apps to lessen the time you take to manually update your budget.
- Most banks, credit unions, and credit card issuers have apps that can help you track your spending, manage where your money is, and even help you limit your spending on cards.
- Contactless forms of payment, such as mobile and digital wallets, can help manage the security part of your personal finances. These payment methods offer improved security that can help keep your personal finances safe from scammers.
B. Use credit cards responsibly and manage your debt well.
- Mortgages, student loans, car loans, and credit cards are major parts of personal finances that CANNOT be overlooked. Debt can have a large impact on your personal finances, but you determine whether it’s good or bad, depending on your habits.
- For loans, when possible, use your lender’s auto-pay option. This way, you know you’ll never miss a payment, and can more easily keep your credit reports clean of delinquencies.
- When using a credit card, treat it like a debit card. Never spend money you don’t have and ALWAYS pay your statement balance in full each cycle.
- If, for any reason, you can’t pay off your statement balance, pay the minimum and as much extra as you can. Interest racks up quickly on credit cards, and if you’re not careful, you can find yourself paying hundreds of extra dollars on top of your balance.
- Many credit card issuers allow you to receive credit score updates through their app for free. If you can, set up notifications for changes in your credit scores so you know where your reports stand, and if changes need to be made.
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C. Work on your credit history and improve your credit scores.
If you want to improve your credit scores, whether you have existing credit or not, there are a few things you can do.
- Use a credit card for your normal shopping, and pay off the full balance each month. This will help you build credit and potentially save money with rewards on purchases you’re already making anyway.
- If you don’t already have existing credit, there are still options for you to build a strong credit profile.
- Take advantage of credit cards designed for people with new credit, like student credit cards. They’re easier to be approved for and are meant to help you build credit faster.
- Apply for a secured credit card. These are much easier to be approved for because they require an investment from you on the front end.
- Become an authorized user on a trusted family member’s account. Their responsible habits will be reflected in their credit. Be careful though, any irresponsible behavior on their part will also show up on your reports.
- Take out a credit builder loan, which is designed to help improve your credit.
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D. Create a budget that you can stay consistent with.
- Living below your means is essential to your financial health. This means creating a budget that has you spend less than you earn.
- Create a budget that is simple enough to stay consistent with, and set reminders for yourself on your phone (or whatever works best for you) to follow up with your budget on a minimum of a monthly basis.
- If you tend to procrastinate or don’t like budgets, make it fun. Set goals and rewards for yourself if you meet those goals. Compete with yourself from last month to see if you can do better.
E. Attack your debt with proven methods.
- Eliminating debt can save you a lot of money in interest. The faster you can get rid of the debt, the more money you’ll save.
- Use the Avalanche Method, which has you target your debts with the highest interest rates first, while making minimum payments on all the rest of your debts. Once the most expensive debt is paid off, move to the next-largest interest rate, and so forth.
- Use a balance transfer card to get rid of credit card debt. These cards come with a 0% introductory APR for a short period of time. Use these to save money on interest and pay off your debt faster.
- Consolidate your debt with a personal loan. Find a loan that offers a low-interest rate, and pay off all your debts with that loan. This will save you on interest and stress, bringing all of your accounts into one monthly payment, making them easier to manage.