The ability to manage your money is a necessary skill to have. Lessons that I have learned from favorite TV shows is that everybody has a different approach when it comes to money. Amazing money management takes a lot of time to learn, but it can be done, if we focus on personal finance for a moment this skill involves saving money for unforeseen circumstances that we all face sooner or later and you have to have resources to make it out of a potentially bad situation.
I would recommend for a person to understand their credit situation as a starting point. Credit is hard to maintain and establish but can only take a matter seconds to destroy, and once it is destroyed it can be hard to repair. There are three things that can destroy your credit and those three things are, not making the effort to repair things on your credit, maxing out your credit cards, and making late payments.
Not fixing things on your credit can affect your credit score. You may have a point that are on your credit report that can be disputed and you should also be concerned with someone else using your name to make purchases or open up credit in your name. You can check your credit score annually at credit karma.com, free credit report.com and many other websites that let you see your credit score.
Maxing out your credit cards looks bad; you are negatively affecting your credit utilization rate. This is the amount of available credit compared to your balances. It is recommended that you keep your credit utilization rate below 10% of your available credit. Amounts that are owed determine 30% of your FICO score.
Last but not least, making payments late accounts for 35% of your FICO score, so making payments on time is crucial because it will impact your credit score drastically.
Finance also has to do with investments and the way you acquire those investments through planning, also called financial planning. This financial plan that you create for yourself will allow you to look at how much money you have coming in as income so you can set financial goals for the future. Start out by saving, open a savings account because the money you invest will compound annually adding money to the interest allowing your money to grow if you don’t touch this money you will be amazed at how far your money has grown and will continue to grow.
The most important thing is to plan for the future, have money for your retirement set aside the sooner you save, the better, but it is never too late to start saving for your later year. If your finances are in a healthy state and you want to invest your money into other things you can open a business, or start an investment portfolio.
The way to create a better financial situation is to accumulate assets; those assets can be purchasing a home or car, starting a business as I mentioned earlier, paying for educational expenses, and saving for retirement. Money management is important, and many of us who weren’t taught the value that comes along with understanding our money and making our money work for us. You wouldn’t believe how many people are out there who don’t know how to manage their money.
For those people who are reading this I know a way to help you. Start out by setting goals; you need to have a plan of attack. Track your spending, know where your money is going. Automate savings that means to set aside a certain percentage into your savings account a month. Prepare a budget and stick to it. Change your spending behavior, stead of eating out every day make meals instead. Borrow wisely, credit is a good thing when used responsibly it can help you in time of need, banks will trust you and loan money to you if you pay back what you borrowed on time and always prioritize bills.
Paying close attention to the above-mentioned things will keep you on top of your finances everyone has a responsibility for their own finances no one can do it for you, start today by making better financial choices and decisions.