Published on May 04, 2023
Written by Ellie Meenan
The term “financial literacy” refers to a variety of different skills and concepts. Everyone's financial situation and financial well-being are different. People who are financially literate save more money and have less of a chance of fraud. To protect your finances, you should be familiar with and consider these ten recommendations.
1) Commit to a spending plan.
Create and commit to a budget tracker. Try reviewing it monthly to start, and eventually move to a weekly basis. Save your receipts and track your finances closely.
2) Minimize your debt.
Pay off your debt as soon as possible. Start by figuring out which loans have the highest interest rates and prioritize paying those off first. If possible, pay off more than the minimum amount due each month.
3) Protect yourself from financial fraud.
Never share personal information. Don't give out your financial information—Social Security number, credit card, or bank account numbers—to anyone you don't know. Sign your credit cards immediately and check your credit card statements frequently for any suspicious activity.
4) Look up your credit report.
A good credit score can help you receive better-than-average APRs (Annual Percentage Rate) from lenders and increase approval odds for credit loans. With good credit, you have better chances at qualifying for a mortgage, lease or car loan. Tracking this regularly will ensure there are no surprises or setbacks when trying to receive any type of loan.
5) Keep track of your money.
Creating a budget is one step, but ensuring you understand where exactly your money is going is another. Understanding the breakdown of your finances will help you make better financial decisions and assess where to allocate more or less of your money.
6) Build good financial habits.
Building good financial habits is an often-overlooked step in becoming financially stable. It all starts with habit building. Create goals and set boundaries for yourself. The more you practice and stick to those goals the easier it will come.
7) Have a plan to repay your debt.
If you have debt to pay off, create a specific and detailed plan that allows you to achieve the goal of repaying your debt. Having a plan that you can track progress against will ensure you stay on course and repay your debt, which in turn means saving more money.
8) Reassess your financial goals.
Life changing situations such as a job change, promotion, potential lay-off or spot bonus can impact your financial goals. Take the time to sit down and adjust your financial goals as needed in the event of a situation that impacts your finances. Ask yourself questions such as, “is there debt I can pay off with this excess money”, “are there certain experiences I need to refrain from to have a contingency fund while looking for a new job”?
9) If you can, set some money aside for unexpected expenses.
It is important to have a contingency plan or emergency fund set up in the event of an unexpected expense such as house or car damage or injury to ensure you are financially stable in unprecedented situations.
10) Understand your financial products and services.
There are so many tools and resources to help keep track of expenses and to assist with budgeting. Ensure you have a clear picture of your credit card payment dates, overdraft and withdrawal fees and the services offered to you to help educate and consult you on decisions.
Understanding and focusing on these 10 tips will help set you up for long term financial success. Contact your Financial Advisor if you have additional questions or concerns or are interested in talking through one of the tips further.
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