28
Feb

Credit and Finances

Finances are something which many of us breeze through our 20s without giving much thought to. That’s not to say that twenty-somethings can’t be financially savvy, but many of us aren’t thinking big picture when we’re just starting out in life. And until the past decade, the extent of education on financial management fundamentals happened at home or it didn’t happen at all.

To that end, many people enter their 30s without much knowledge about how to manage money or how their financial decisions might impact their credit score. Because this is also the time in life when people are buying a home or starting a family, making smarter financial decisions that will help them achieve their life goals and to avoid the need to repair credit later in life.

It’s not entirely fair to single out 30-year-olds when recent surveys show that Americans of all ages aren’t doing a great job with money management — in fact, 60 percent of Americans don’t have over $500 in savings. Still, there are some basic things that the younger generation should be doing with their money by the time they enter their fourth decade of life.

Implementing smart money practices will help establish good financial habits and maintain better credit scores, so here are 5 things you should be doing with your money before you turn 30:

  1. Tracking and monitoring how you spend it.

    Check registers are so 1990, we know. But today spending can be easily tracked via apps like Personal Capital. In the age of the debit card and credit card, it can be easy to spend mindlessly without really keeping track of what is spent where. It’s important to periodically track expenses for a two- or three-month period, however, to gain an understand of how and where money is being spent. This can help identify where money is being spent wastefully, or to identify areas where spending can be cut back.

  2. Saving it — or at least starting to.

    You don’t have to have an extra $1,000 lying around to start a savings. It can happen a little at a time. Whether you start with $5 or $50, the most important thing is to start. Financial experts recommend building your savings to an amount that would sustain you for at least three months should you suffer an unexpected job loss or other event. When you’re starting out, identify what it would take to do that and set a realistic deadline by which you’ll have that amount saved.

  3. Using some of it to pay off high-interest debt.

    If you carry debt, especially credit card debt, try to pay off the high-interest portions first. Many of the credit cards we get early in life come with high interest rates, which can end up costing us lots of money even if our balances aren’t all that high. Use the rule of paying off the smallest balance first and them moving onto the next, and so on until you have paid off as much as possible. This is money that can be applied to that savings mentioned earlier, or put towards an investment.

  4. Contributing a portion of it to your 401(k).

    No one would say they have “extra” money that they can afford to lose from their paycheck. Still, it’s imperative to contribute if you have the benefit of access to an employer-sponsored 401(k) plan — particularly if there is an employer match. If there is a match this is like free money, and regardless, it’s an important investment in your future that you must start as soon as possible in order to benefit later in life. If at all feasible, you should also consider alternate retirement savings accounts, such as a Roth IRA, traditional IRA, or health savings account.

  5. Being selective about how you spend.

    As you gain more insight into your finances, it’s important to prioritize what is and isn’t worth spending money on. After all, you work hard for your money and you want to have something to show for it. Consider what’s most important, what you’ll save for, and what you’re willing to splurge on. A good rule of thumb is to make purchases based on true value, both financial and emotional.

By making a habit of doing these things with your money by the time you reach age 30, you can better position yourself to reach your financial goals, and to attain a high credit score that can save you money in the long run on loan interest rates, etc.

If you have fallen short on some of these tips and find yourself in need of credit restoration, however, there is help available. And if you’re not sure where to start, contact CreditRepair.com today at 1-855-255-0238. We offer a free, personalized credit consultation and credit report summary.

 

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Posted in Finance