Financial health is all about knowledge. Maintaining your repertoire of financial education is essential to retaining a healthy cash flow, a growing savings account, and reasonable and manageable debts. Improving your finances should be a long-term goal for everyone, but sadly many people don’t realize the importance of these fiscally responsible practices until it’s too late.
Maintaining your finances is, in truth, a habit, and one that anyone can institute in their own life and foster for continued growth. Financial security starts with a commitment to yourself and an understanding that the only way to create wealth that serves your needs is to start working on your cash habits today in order to take control of your financial future for the rest of your life.
Keep an eye on your credit score
Your credit score is a moving target and depicts a generalized image of your ability to pay back debts that you have accrued throughout your lifetime as a borrower. It provides lenders with a snapshot of your creditworthiness and a gross recommendation as to whether or not they should lend to you. Your credit score is not an encompassing report on your life, financial health, or attitude toward responsibilities and morals. Credit scores help lenders make decisions about interest rates, loan and credit line amounts, and repayment options.
Even though they don’t provide an encompassing view of you as a human being, a poor credit score can severely hinder your ability to engage in important life steps like buying a home. Today the average first-time home buyer in the United States is 33, due in part to a combined downturn in both the market and personal financial health after the housing crash more than a decade ago.
Operate with minimal credit expenses
Keeping your finances and purchase summary clear of the tacked-on interest that accompanies credit card spending is an important lesson for those carrying credit card debts across monthly payment dates. Paying down your credit card balances is an important way to manage your overall financial health over the long term because credit cards carry some of the highest interest rates you will find across borrowing opportunities. It’s incredibly easy to rack up huge credit card debt, and the average American now owes about $6,200 to credit card companies.
Keeping a strict budget is the best way to maintain healthy cash flow and strong financial independence that will buoy you through any hardships you may face in the future. The pandemic we are all struggling through today offers a great lesson in the importance of financial management. Those who have saved for a rainy day are far better off today than their neighbors who lived paycheck to paycheck and decided not to save a portion of their income all these years.
The economy has been on a rocket trajectory that was suddenly and unexpectedly cut down at the beginning of 2020. Those with savings haven’t felt the squeeze while most Americans have suffered from cut hours, work from home arrangements that may stifle productivity, or the inability to travel and see family that creates knock-on effects that reverberate through a uniquely financial lens.
Consider tax implications throughout the year
Contemplating the tax implications of any particular decision should be a habit that continues throughout the year — not just as tax time approaches. Many of the things you invest in and purchase for consumption can be leveraged to decrease your overall tax burden. Filing your free tax return online with a tax preparer can help you unlock these additional deductions that most of us simply overlook can give you access to a greater tax return check that can go straight into a savings account, pay down loans, or fund that next family vacation.
Maintaining great financial health starts with knowledge, applying that learning to all aspects of your cash flow will provide innumerable benefits to your bottom line and help lower stressors that impact your daily life.