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Money Management

Planning a budget will help you manage money efficiently. Doing this now and through out the course of your life will help build effective money management skills. It is hard at first, but well worth the effort for on going end result.

Budget

Step by step plan for meeting expenses in a given period of time. Keeping a budget will help you control your finances, assets, and reducing stress related to money. You can construct a budget by doing these simple things:

  • Identify what income you have
  • Identify your expenses, such as:
    • Savings/Emergency funds
    • Major items (needs)
    • Minor items (wants)

Need: Something that is vital (e.g. housing, groceries, clothing, utilities).
Want: Something you can do without (e.g. cable, internet, and latest fashion trends).

Record Keeping

Store records in a safe place for easy access. Keep records in order for at least three years.

Savings/Emergency Funds

Your income is not always guaranteed, due to:

  • Lay-offs/Unemployment
  • Automobile Accidents
  • Unexpected Health Reasons

It does happen and it’s important to have a separate savings account in case it happens. As you begin to save treat it as an expense item until your goal has been met. Always take care of yourself first!

Loans and Credit Cards

High interest accounts are in your best interest to be paid off quickly. Reduce your cost, negotiate a lower interest rate, and when possible increase your payment in order to reduce your principal amount, this will cut the amount of interest when you finish paying what you owe. Are you in high debt? Not sure what to do? Consider debt consolidation or seek advice from a professional. Contact your creditors for assistance.

What is the difference between a credit report and a credit score?

  • A credit report contains all of the information related to your finances, such as payment history and amounts owed.
  • A credit score is the numerical value calculated from the credit report used by creditors to help determine credit worthiness.

What is a FICO score?
A FICO credit score is a method developed by Fair Isaac & Co which determines the likelihood credit users will pay their bills.

Scores:
Above 719 = Excellent Credit
680-719 = Good Credit
620-679 = Lender will take a closer look at your file
585-619 = Higher risk, you will not be eligible for best rate and product
Below 585 = Credit products may not be available; Lenders will need to consider other information in your application.

The three national credit agencies:

Equifax
PO Box 740241
Atlanta, GA 30374-0241
(800) 685-1111
www.equifax.com 		Experian
PO Box 949
Allen, TX 75013
(800) 682-7654
www.experian.com 		Trans Union
PO Box 390
Springfield, PA 19064-0290
(800) 916-8800
www.transunion.com

For a free credit report log on to: www.anualcreditreport.com

Tips for being money smart

Get organized
First organize the money that you have on hand numerically. Find out where your money goes every month, write everything down. This will let you know where your unnecessary expenses are for example: expensive coffee drinks, eating out, and impulse purchases. Compare this to your investments, for example savings, emergency funds, stock’s to see which is greater.

Shop Smarter
You can do many things by reducing food expenses such as eating out, public transportation rather than your own vehicle, discount entertainment, and shop for what you “NEED” not for what you “WANT.”

Review how much you owe to creditors
When you review and identify your debt the faster you can make a plan of action to reduce your debt. Plan by cutting expenses, pay with cash, and try increasing income. This will help you build a strong credit report and make sure to review your credit at least once a year.

Financial Goals
Develop a plan, something short term and long term, measurable, and easy to track. Always leave your financial plan open for interpretation for things may change during your goals. This will enable you to invest money for the future while reducing debt as quickly as it permits you and try to maintain a reasonable lifestyle.

Tips to Get Out of Debt

  • Make more than your minimum payment on your credit card
  • Pay off your highest interest-rates cards first, then move to the next
  • Call your creditors and ask for a lower interest rates
  • Make a budget and stick to it
  • Revisit your childhood days and bring your lunch
  • Get a part-time job or increase your hours
  • Leave your credit cards at home