Thinking about finances can be stressful, especially if you are already in a tight money situation. However, it is crucial to take steps to prevent going into further debt and start getting your money situation back on track. Being preemptive about a financial problem can prevent a lot of stress down the road. Here are three ways to be smarter about finances.
1. Know Your Credit Score
A credit score is a three-digit number that lets lenders know how financially reliable you are and how high of a chance there is that you will be able to pay a loan back in full. The higher this number is, the more favorable you will be looked upon by lenders. A credit score is based on factors such as debt levels, number of bank accounts, and the percentage of previous payments made on time, among other things. There are ways to check your credit score for free, and some companies may perform credit check services for employees.
2. Make Your Minimum Payments
It is necessary to make at least the minimum payment on your credit card in order to avoid late fees and other penalties. If possible, a smart move is to make even more than the minimum to prevent high amounts of interest from accruing each month. Making your regular payments on time also positively impacts your credit score.
3. Keep Track of Spending
The small purchases that people make each day, such as that morning coffee at the coffee shop or after-work drink at the bar, can really add up. It can be helpful to see on paper how much you spend daily and weekly. Knowing what much of your cash is going towards can help you make smarter financial decisions.
If you are looking for ways to be smarter with your spending, consider these three habits.