To insure our financial health and success it is imperative to develop sound money management habits. Good money management tools can make the difference between financial success or just getting by. Many common mistakes can be avoided by using the following money management tips as a filter to assess any potential financial decision. Make the following pointers part of your money management strategy.
1. Always pay yourself first! Never allow your bills to come before your financial future. Even if it is only twenty or thirty dollars a month, make sure you pay YOU first. This is a huge step for many people who have been taught and are accustomed to living paycheck to paycheck. Getting out of that mindset and rethinking money management is an essential first step in financial stability and eventual success.
2. The three digits that make up your credit score are more important today than ever before. Insurance companies, landlords and even potential employers are using those three numbers to make determinations about you, whether to hire you or allow you to live on their properties. Employers look at your credit score as a way to gauge you as a future employee. As the modern proverb goes; if your house is a mess so are you. When it come to getting loans, lenders are looking at your rating to determine their risk which directly affects your interest rate. 700-750 is good. Above 750 and the lenders will fall all over themselves to give you a loan. And at a very reasonable rate.
3. Do not carry credit card debt. While many believed that carrying some credit debt actually helped their score, since 2008 we have seen the financial woes of many Americans who thought they could borrow their way out of debt. That might be the way the government operates, but since you cannot create laws to force others to give you money, you must simply learn to live within your means. Since the financial meltdown of 2008, credit card companies are slashing credit lines, increasing interest rates and even closes some accounts, even on good customers. Pay your debt to your card issuers every month in full. If you cannot it’s time to tighten your belt, trim your expenses and pay off all that debt. Get rid of your credit cards if you just cannot control yourself. You’ll thank me later.
4. Buy Wisely! There are people who are struggling financially but have incredible debt notes on their automobiles or homes. In the recent past in was in to have a big house or car. A friend of mine has a monthly payment of over $700 for his tricked out truck. That’s almost three-fourths of my mortgage! Another friend of mine was involved in the sub prime fiasco and was paying almost $3000 per month on his mortgage after the housing market crashed. Make sure you plan for contingencies and financial mishaps along the way when you purchase auto’s and especially a home. Murphy’s law: if life is good now just wait awhile, it will change, it always does.
5. Don’t tap into your savings to satisfy your temptations. This is a recipe for disaster. Savings is just that, savings for a future day a long ways down the road. Life’s inconveniences always come at a most unexpected time. Don’t dip into your savings just because you saw a great deal at Sears on the newest 3 speed riding lawn mower with AM/FM/MP3 Stereo. If you really want that mower, save for it!
6. EDUCATE YOURSELF in money management and the way money works. The reason the rich are rich has nothing to do with luck. They know how money works. When you know the principles of how money works, creating wealth is much easier to accomplish.