Your financial life often starts in your 20’s. It’s a great time for building a solid financial foundation. You don’t want to look back years from now with regret about how your younger self made things difficult for your older self.
Unless you have parents that have taught you great financial responsibility and how to manage money, those concepts aren’t something we learn in school or really, anywhere else. Unfortunately, it’s usually left to the School of Hard Knocks.
Freedom Debt Relief says don’t let this be you. In this article, you’ll learn several tips for starting your financial life on the right track.
Budgets Are Wonderful Tools
You probably dread the word budget. But the positive financially impact a good budget can have can’t be underscored. If you want to create a solid financial foundation for the rest of your life, you need a budget.
At the core of a budget is tracking your income and spending in detail. Freedom Debt Relief points out that spending should be categorized and each category allowed on a certain amount of spending per month.
When you go to the grocery store, have a list and purchase only what is on the list. If you find that you are adding items that aren’t on the list, recognize what is happening. You’re basically breaking your budget, which means you aren’t going to hit your financial goals.
That may seem like an overreaction but budgets are meant to help change financial behavior in addition to keeping you from overspending.
Guard Your Credit
To get almost any type of loan, you need good credit. How well you are able to manage your financial behavior is reflected on your credit.
FICO, which created the FICO credit score, uses 5 components to calculate the score. Two of them, payment history and credit utilization, make up 65% of your score.
Craig Watts, a spokesman for FICO, had this two say about the payment history and use of credit components, ”FICO scores give the most attention to how you have paid back lenders in the past and how much you are using of the credit available to you, as shown on your credit report. Those two factors contribute roughly two-thirds of a typical person’s FICO score.”
If you can focus on always making on-time payments and only opening and using credit you “need”, it will go a long way to keeping your credit score in good standing.
Given the lack of formal financial education in school, Freedom Debt Relief mentions that it’s important to educate yourself as much as possible about personal finance. This means learning about budgets, car loans, mortgages, paying down debt, saving for retirement and more.
The better you know how to manage your personal finances, the easier and less complex your life will be.
Are you facing a mountain of debt that you can’t get out from under? Freedom Debt Relief could help resolve your debt so you’re debt free faster. Contact them at freedomdebtrelief.com for a free evaluation with certified debt consultant.