Whether you are new to personal finance or just looking to brush up on some basic skills, these simple tips and tricks will help boost your current financial standing.
1. Establish an emergency fund.
It never fails. Cars break down and hospitals bills need paid. Unexpected expenses always seem to crop up at the most unexpected (and inconvenient) of times. To prevent yourself from being caught with empty pockets, take some time to build up your emergency fund for such situations. Wells Fargo recommends saving at least 3-6 months of take-home income for emergencies.
2. Set a budget.
Using Excel or Google Sheets, calculate all your monthly expenses and categorize them based on type. Some of your expenses, such as food, gas, and electricity, may vary a bit month to month, but try to make these numbers as accurate as possible. Round up whenever possible to give yourself an extra bit of a financial cushion. Post your budget somewhere you will see it every day and stick to it.
3. Track your spending.
Every time you spend money, record the transaction in either a physical journal or an expense tracking app. Used in conjunction with a budget, expense tracking is an excellent tool for financial planning. Be diligent about your records and don’t forget to track any transactions, even during months when you overspend.
4. Set specific financial goals
Decide what you want to accomplish and establish firm deadlines. Make these goals small and attainable, and always within a fixed period of time. For example, you could decide you want to save $1,000 by Christmas. This is a timely, manageable goal that will set you up for financial success.
5. Keep an eye on your credit score
A poor credit score can lead to rejection of loans and other lines of credit as well as difficulty getting a rental application approved. By regularly checking your credit, you will be aware of any drops and understand what potential lenders may see when they look at your account. Websites like Credit Karma allow you to check your credit score for free.
6. Get a secured credit card
Unlike a regular credit card, a secured card allows you to build credit without the risk of overspending. These can be obtained even with poor credit or a short credit history, making them ideal for college students and recent high school graduates. This type of card is backed by a cash deposit you make when you first open the account. This means that if you don’t pay your bill, the credit card issuer can simply take the money back from your account, thus minimizing their risk. By using a secured credit card responsibly, you can start to raise your credit score and eventually qualify for a standard credit card.
7. Get renter’s insurance.
If your apartment were to catch on fire, your landlord’s homeowners insurance should cover damages done to the physical building. However, did you know that your personal belongings (clothes, electronics, jewelry, etc.) would not be covered under that policy? Therefore, if you rent your current place of residence, it is up to you to
acquire renter’s insurance to protect yourself from robberies, natural disasters and other such risks. For a low monthly cost, you can save yourself thousands of dollars when life’s unexpected expenses occur. Regardless of your current financial standing, these basic financial tips can help boost your credit score, build your savings account and create a better financial future for yourself.
