Tips to Improve Your Financial Health
While you’re making your resolutions for 2016, don’t forget about your finances! Here are four simple ways you can improve your financial health. Choose the one that you’ll stick with and that will have the most impact on your wallet.
- Start an emergency fund. You never know when something unexpected will happen. The key to surviving these life-changing events is to anticipate hard times by building and maintaining an emergency fund with three to six months’ worth of living expenses. Make an effort to set money aside every month, no matter how small the amount.
- Spend less. Do you sometimes feel lost as to where your paycheck goes every month? Take a month and document your expenses, both fixed (mortgage, car payments) and variable (food, entertainment). Remember to be honest with yourself. Find your “vice” and try to realistically eliminate it from your budget.
- Cut credit card debt. If you have a $5,000 credit card balance with a rate at the national average of 15% APR and make only the minimum payment every month, you’ll be paying off that debt for 24 years—and paying over $7,000 in interest! Make a payoff or pay down plan and stick with it, such as paying small balances off first, or tackling the bill with the highest interest-rate.
- Improve your credit score. The first step to improving your credit score is to know what it is. Get in the habit of reviewing your credit score every three months. Federal law allows you to get a free credit report once every twelve months from each of the three major credit bureaus. Learn more here.