Being financially sound is one of the most important things that you will have to learn how to do. There are certain, specific tips that you should learn to master so that you can make your financial life significantly less stressful. Here are seven financial wellness tips that you can start performing today.
Build Your Credit
It’s important to understand the role that good credit plays in your adult life. Without good credit, you may not be able to get the financing for items that you wouldn’t be able to pay for out of pocket. This includes student loans, mortgages, car loans or even personal loans.
Understand the parameters of what can influence your credit score, and you will make it easier for lenders to give you financing. This can come in handy if you find yourself facing an unexpected financial emergency and find yourself considering applying for installment loans online.
Pay Your Bills on Time
Being punctual in your financial obligations is crucial in more ways than one. First, paying your bills on time will show that you are responsible with your finances. If you take out a loan from a bank and other financial institutions, one of the things that they will look for before handing you the finances you desire is your credit worthiness. What does this mean?
As you slowly start to build credit, one of the habits that will positively or negatively influence your credit score is whether or not you have been making payments on time. If you borrow money, ensure that you will be able to make payments on time and have a plan to do so.
Live Within Your Means
This can be something that is difficult for many people but living within your means will show that you have more money available than you think. If you waste money on insignificant purchases or do not live within your means, you will find yourself in a difficult financial situation than when you began.
Living within your means also entails making wise decisions with the money that you have at your disposal. Insignificant purchases can also serve as extra money you can use to pay for bills or make monthly loan payments. Do not purchase expensive items that you know you is not within your budget.
Track Your Finances
With all of the bills and financial responsibilities you will have on your plate, it can prove to be difficult to stay on top of everything. Therefore, it is important that you find an effective way to not only manage, but track all of your finances. One of the most popular methods of doing so is by starting a spreadsheet in Microsoft Excel.
This is directly related to tracking your finances. By effectively budgeting your money, you can be more effective in ensuring that you have enough funds to take care of your financial responsibilities. You will also find that insignificant purchases or impulse buys can be hurting you more than you think.
Use Credit Cards Wisely
Unfortunately, a strong misconception exists that credit cards are free money. This is not the case at all. Credit companies will grant you a card with a set credit limit, and whatever you spend should be paid back. You should be encouraged to not spend any more than a third of your credit limit so that you don’t have another big bill to worry about at the end of the month.
Retirement may seem like a century away, but time can fly very fast, and the last thing you will want is to retire with no available funds at your disposal. It is recommended that you save at least 15% of your annual income. Fidelity’s rule of thumb states that you save 10 times your income by the time you turn 67. Set goals and invest your income into tax-advantaged accounts such as a 401k or an IRA.
As you can see, being financially responsible is an important skill to master in your life. Follow these financial wellness tips, and you will relieve a lot of the stress that finances can bring.