4 Ways You Could Be Ruining Your Finances
4 Ways You Could Be Ruining Your FinancesKeeping track of your finances will help you take control of your daily living expenses, but there may be significant everyday obstacles that could be hurting your finances without you realizing it. Take action to create better money management habits by making sure you are not ruining your finances and are instead helping yourself create a better financial future!
Create a Budget
The first step in keeping track of your finances is creating a budget. It is important to know where your money is going and how much you are spending to ensure you are not living beyond your means. You can customize your budget to include all of your expenses by separating and creating budgets for multiple categories such as rent, utilities, savings, emergency funds, spending money and more. There are many different methods for creating a budget which can be easily tailored to your lifestyle. Learn more about budgeting by reading SDCCU’s blog Finding the Budget Style that Works for You for helpful tips on budgeting and to find one that works for you.
Avoid Social Media/Emails Offers
It is time to unfollow and unsubscribe! Yes, we know it may be easier said than done, but sometimes seeing social media ads, marketing promotions or receiving sale emails from your favorite stores can cause you to feel pressured to spend. If you do not regularly shop at these retail stores or online shops, opt to unsubscribe from emails, unfollow social media pages and turn off alerts for shopping apps to help eliminate or reduce any temptation to splurge. Reducing the amount of exposure you have in your daily life by avoiding seeing or hearing about sales will help you save. This doesn’t have to be a permanent change, but could temporarily assist in reaching your financial goals.
Understand Your Wants vs Needs
This tip is one of the easiest to understand but hardest to execute. Establishing a budget will make it easier for you to keep track of the actual necessities required for your specific day-to-day needs. We all have wants and can splurge, but prior to doing so, ask yourself these two questions: “Do I need this or want this?” and “Can I afford this right now or can this wait?” Adding a miscellaneous category to your budget for items that you identify as wants is helpful. This doesn’t mean that you can’t fulfill your “want” wishes as your budget allows, but this exercise will help you paint a clear picture of what your actual “needs” costs are compared to budget availability.
Stay on Top of Your Credit Score
Last but certainly not least, keep track of your credit score! You should be regularly checking your credit score to ensure it is the best it can be as it will help you save. According to an article posted on Experian, credit scores can range from 300-850, with an average score between 600-750. Payment history typically accounts for about 35% of your credit score, so consider setting up automatic payments to make sure you never miss a payment. Some may think closing your old credit lines is a good idea once a card is paid off, but it can actually negatively impact your credit. Lenders consider the length of your credit lines as part of your credit worthiness. Lenders reviewing your application for a loan need to confirm you can maintain your accounts, so the older the account, the better.
The path towards financial success starts with you! Doing an assessment of your current financial situation and running through a checklist of common financial pitfalls can help you avoid inadvertently damaging your financial situation. It is important to recognize and change your negative money habits to ensure you are on the right path to reaching your financial goals.
Visit our Financial Knowledge Blog to learn more tips on setting up a solid financial future or join us for Financial Wellness Wednesdays.