Fresh Start

There will be many things you need to learn about money throughout life. So let’s cut to the chase and talk about the top things you need to know now:

There’s a famous expression that says “Failing to plan is planning to fail.” When it comes to your finances, this is a plain truth. The root of most financial problems comes down to a failure to plan. For many this results in challenges such as high credit card debt or spending more than what they earn. How can you avoid falling into these same traps? One of the best ways to plan your finances successfully is to budget. Here’s how it’s done:

First

• Write down what your income and expenses are now.
• Quick tip: Don’t forget to include expenses that happen occasionally like clothes and insurance.

Second

• Track your expenses by writing them down for one month.
• A Tracking Worksheet is helpful. You can also use online and mobile banking to track expenses.
• Quick tip: Tracking is important because it helps you remember everything and create accuracy in your plan.

Third

• Total up your expenses and subtract them from your income.
• Quick tip: If you’re spending more than you’re making, take a look at the things you can easily reduce like snacks, lunches, coffee, etc.

Fourth

• Write down the dates when you need to pay your bills and expenses, and when you receive your income.
• Quick tip: Knowing when you get paid compared to when you have to pay expenses will help you figure out when you need to reserve funds to pay bills each month.

Fifth

• Figure out how much you can save and work towards a specific goal – vacation, car, special class. etc.
• Quick tip: Have a clear time frame for your goal. Knowing when you’ll actually achieve what you want will give you motivation.

For more information about planning your finances when you’re starting out, review the Road to Financial Independence Guide.

You’ve probably heard quite a bit about credit reports and scores on the radio, TV, or Internet, but haven’t actually heard how it all works. The first thing to know is that establishing your credit is extremely important when you start off financially. Without good credit, it’s difficult to rent an apartment, get a car loan, get a cell phone, or obtain car insurance at reasonable price.

In the financial world, a credit report is used in the same way a college uses your high school transcript. If your transcript shows you handled yourself well in high school, you’re more likely to be accepted into the college to which you apply. When it comes to finances, the people you apply to—banks, landlords, creditors—want to see that you have a history of handling things well before they trust you with their money. Essentially, they want to see two main things. First, that you don’t owe a lot of money, and second that you always pay people back.

Here are the important things to do to establish your credit the right way:

• Find a way to establish on-time payment history with money you borrow.
  • Consider this: A secured credit card is an easy way to get started. To get one, you make a security deposit with a bank or credit union. Since they have your deposit to fall back on, your credit history isn’t considered heavily. Learn about the ESL Visa Secured Credit Card.
• Always pay all your bills on time.
  • Consider this: Normally the things reported on your credit report are from loans, but anything, such as unpaid medical bills, can wind up on your credit report if they are unpaid and sent to collections. 
• Don’t spend more on credit cards than you can pay in full each month.
  • Consider this:

• Check your credit report each year through www.annualcreditreport.com.