Building money confidence is one of the first steps toward achieving financial flexibility and freedom. But if you're not currently feeling confident about your money management skills, we're here to help!
Here are a few steps you can take to boost your money confidence and gain control of your finances:
1. Track your spending habits
When it comes to your personal finances, knowledge is power. To get a clear picture of your financial standing, track your spending for one month. Write down every dollar you spend, then categorize your expenses. You may see that small purchases add up quickly! Keeping track of your spending can help you create a realistic budget and find opportunities to save.
2. Take inventory of your debt
Next, get a snapshot of any debts you owe, such as credit card debt, student loans, personal loans, auto loans or a mortgage loan. Filling out a Debt Inventory worksheet can help you get organized. It involves listing out all the debts you owe as well as the total balances, minimum payments, interest rates and due dates. You can find this information on your credit report at AnnualCreditReport.com or by asking the lenders directly. Knowing exactly how much you owe will make it easier to prioritize your debt obligations and make a plan to get ahead of debt.
3. Know your credit score
Whether you're just starting out and trying to build credit or you've been using credit for a while, it's important to be aware of your credit score. Having a strong credit score may positively impact your financial future when it comes to getting loans, renting an apartment or even applying for a job. Where can you find your credit score? Many credit card issuers offer free credit score monitoring, and so do a few websites. If your score isn't as high as you expected, you can take steps to improve your credit score over time.
4. Create a budget
When you create and follow a budget, you'll know where you money is going instead of wondering where it went. A budget gives you a feeling of empowerment and control over your money.
One common budgeting system is the 50-30-20 rule. With this method, you spend 50% of your income on needs, 30% on wants, and 20% on savings or debts. You may need to adjust these percentages based on your personal situation. Remember, the best budgeting method is the one you can stick to!
5. Bring your goals into focus
Setting short-term money goals can give you the confidence boost you need to achieve larger goals that may take more time. One goal to start with is creating an emergency fund for unexpected expenses. Aim to save $500 to $1,000 in your starter emergency fund. As a long-term goal, work toward an emergency fund equal to three to six months of living expenses. It's a great feeling to know you're prepared for unplanned expenses and emergencies!
At Wright-Patt Credit Union (WPCU), we're here to help you build financial confidence so you can live the life you want to live. We offer helpful resources to help you understand how to better manage your money, including worksheets and calculators, videos, interactive learning modules and webinars covering a variety of financial topics.
If you're looking for one-on-one financial advice, meet with one of our Financial Coaches at your local Member Center. Together, we'll help you take the first steps toward a bright financial future!