When making sound financial decisions, it’s key to have a strong understanding of personal finance. Unfortunately, we tend to fall short with a lack of adequate instruction in this area until it’s too late. If you want to improve your financial literacy with a strong foundation, there are a few key topics you should focus on. Practice will solidify what you are learning and what you know, so now is the perfect time to Implement them. Use a personal finance software program on a calendar to simplify the steps, stay on track, and hit all of your financial goals on time.
Grow Your Savings First
Saving money is one of the most difficult aspects of personal finance, yet it’s also one of the key financial foundations to be immune to the allures of marketing messages. Start with at least three to six months’ worth of living expenses saved in an emergency fund. This way, if you ever lose your job or encounter unexpected medical bills, you’ll have the money you need to stay afloat.
Saving requires discipline, but there are a few personal finance tips that can help you make it easier. First, make sure you’re automatically transferring a fixed percentage of your income into savings as soon as you get paid. This way, you won’t even miss the money. Second, keep your savings in a separate account from your checking account so you’re not tempted to spend it.
The right personal finance software program can help you manage your budget easily and help you identify more money you can save. Use CalendarBudget to set your savings goals and track your progress to keep the required minimum balance in your savings account. Use transaction reminders to stay on top of adding to your savings account regularly. Use the calendar view and future planning to find where you can reduce your expenses to reach your savings goals sooner. Having your minimum of 3 to 6 months worth of savings will help you stay on track to financial wellness, reach your financial goals, and save more money.
Budgeting is at the Heart of Financial Literacy
Budgeting is one of the most key financial literacy topics, yet it also seems to be one of the most difficult for people to master. A budget doesn’t have to be complicated. It should feel simple and natural to track and plan your finances based on your spending patterns. Use your budget as a tool to keep you informed on how much money you have coming in and going out each month, and based on those spending patterns, what should be in your account on any given day years into your future.
Creating a budget can be daunting, but CalendarBudget makes using a personal finance software program not only feel easier to plan your finances, but feel natural. Know how your financial foundation is holding up with a visual of how well you are sticking to the key aspects of your financial success. Track each of your transactions and use the calendar layout to regularly analyze your income and expenditures. This will help you identify categories you may be overspending in to eliminate unnecessary expenses and increase your savings. Yay to boosting your first financial foundational goal of savings. Use the ability to plan ahead to create and plan for success with your budget goals, and to see when you will achieve them. This will help you get a better understanding of your spending patterns and make it easier to create a realistic budget for a strong foundation in your financial wellness.
Manage Debt Efficiently
Debt is a fact of life for many people, but it doesn’t have to be a drag on your finances. If you’re strategic about how you manage debt, you can actually use it to your advantage.
There are two main types of debt: good debt and bad debt. Good debt is typically used to finance something that will increase in value over time, like a home or an education. Bad debt, on the other hand, is used to finance things that lose value quickly, like cars and vacations.
Ideally, you should try to pay off all of your bad debt as quickly as possible. This frees up more money each month that you can put towards savings or investing. To do this effectively, focus on paying off the debts with the highest interest rates first. Stay out of debt by using your budget to prepare to make higher cost purchases when you can pay cash.
Build Your Credit Score
Your credit score is one of the most important numbers in your financial life. For those moments that you can’t pay cash and must use a loan, your credit score will determine the outcome. It’s a three-digit number that lenders use to determine whether or not you’re a good candidate for a loan. The higher your credit score, the more likely you are to get approved for a loan with a low-interest rate. So use it to your advantage to ensure a lower interest rate on your must-have loans. Don’t use loans lightly, but make sure it is a need not a want, and delay the purchase when possible to when you can afford to pay cash.
In the meantime, there are a few personal finance tips you can use to improve your credit score. First, make sure you’re paying all of your bills on time. This includes your credit card bills, cell bill, student loans, and any other monthly payments. Second, keep your credit card balances low. This shows lenders that you’re using credit responsibly and that you’re not overextended. Regularly pay your bills ahead of time and pay your credit card bill at least twice a month to keep your credit score in good health.
Invest for Retirement
Retirement might seem like a long way off, but it’s never too early to start planning for it. The sooner you start saving for retirement, the more time your money has to grow.
Some things you might consider when planning for retirement include when you want to retire, how much money you’ll need to have saved, and what sources of income you’ll have in retirement. You can use personal finance software to help you calculate your costs during retirement and how much you need to save each month to reach your retirement goals.
You might also consider investing in a 401(k), IRA, RRSP or other retirement savings plans. These are retirement savings accounts that offer tax benefits. Many employers offer matching contributions, so it’s worth taking advantage of if your employer offers it.
Use a personal finance software program to plan for your retirement. Look at your current spending patterns that you have been tracking in CalendarBudget. Which of these expenses will be reduced or eliminated in retirement? Are there any expenses or income that will increase with the change in your retirement needs. Speak with your financial advisor to discuss asset allocation calculators and investment analysis tools to ensure your financial goals will be met. This will help you make sure you’re on track and help you work smart to reach your retirement goals.
Improving Your Financial Knowledge
Speaking with a financial advisor or taking a personal finance class are both great ways to learn more about financial literacy topics. If you want to learn on your own, there are plenty of resources available online and in libraries.
You can also find a helpful visual covering your individual finances in a personal finance software program like CalendarBudget. Have a read through our other blog articles to learn more about budgeting, saving, investing, and other important financial topics.
When it comes to financial literacy, knowledge is power. The more you know about personal finance, the better equipped you’ll be to make smart decisions with your money. Use these tips to improve your financial knowledge and take control of your finances today.
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CalendarBudget is the leading personal finance software. It offers features like bill pay reminders, tracking all transactions on a calendar to help you understand your spending patterns, and the ability to plan ahead to make higher cost purchases when money is available.. These features will help you budget better, save money, and reach your financial goals.
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