Whether you like it or not, your finances will follow you for the rest of your life.
Yes, everything from your credit score to your current net worth will play a role in how much flexibility and freedom you have in the future. It’s not an easy thing to manage, and with the average household debt increasing by 11% over the past decade, it’s something that’s going to take a significant amount of time to take hold of.
However, by following a few key steps, the road isn’t as bad as you’d imagine. That’s why I’ve compiled a few starting points that will help you on the way there, check them out below:
Build Up Your Financial Literacy
Having a strong sense of financial literacy is going to be the cornerstone in getting your finances back on track. Unfortunate as it is, most of us don’t know as much about finances as we’d like to admit, which is partly why so many institutions are so successful in swindling money from folks. However, there’s plenty of things you can start reading into as a source of making smart and informed decisions with your money.
One of the first things you should do to improve your financial picture is reading through all of the current debt obligations you have and understand all the implications of them, including how the interest rates might change, any annual fees, or even if there’s a way to transfer balances. This can help you in weighing the decision if you want to consolidate your debt at a lower rate, or even start with a pattern of paying off the highest interest rates first.
Another important aspect to consider is the options you have with debt that’s toxic to your credit report. While most of us might consider that if a bill has fallen behind, then it’s probably a lost cause, but that couldn’t be further from the truth. As Lexington Law – a credit repair firm notes, there’s plenty of options when it comes to negotiating with creditors. This can include a settlement amount that’s less than what you initially owed or a payment plan set in a reasonable timeframe that helps both sides accomplish their goal. Overall, your knowledge base is going to be one of the primary tools you have to a stable financial picture, so study up and utilize it wisely.
According to a survey conducted by GoBankingRates, approximately 69% of Americans have less than $1,000 in their savings account. And while those folks might have access to funds by other means, one quick accident could drain their savings drastically. That’s why it’s imperative you start finding ways to build your nest.
Some experts suggest that the golden rule for savings is to save 20% of your current income. However, that can be a lot for some people so you might want to start in the 5-10% range. Additionally, picking up a second form of income can be a great way to dedicate money towards your financial security, which you’d be surprised at the options available.
For example, it can be much simpler to monetize a blog than you might imagine, and if writing’s not your forte, then on-demand gigs such as Uber or Lyft could bring in some extra cash as well. The goal here is to give yourself some wiggle room, whether it be in the event of an accident or even wanting to make a large-scale purchase, like a car. And while you might think saving is something that’s going to take forever, there’s actually been some companies working towards speeding up the process.
Technology Is Your Friend
The FinTech industry is currently booming. According to a survey by EY, this past year has seen an average adoption rate around 33% for FinTech products which range from banking products, peer-to-peer payments, and even micro-investing. Not only do a lot of these products help aggregate and keep tabs on your financial picture, but they can potentially help it grow too. Perhaps one of the most fascinating cases of this is investing with companies such as Stash and Acorns, which allow you to put small amounts of money into index funds that grow over time. This can be an excellent way to save, and you don’t need to have thousands of dollars to invest.
Believe it or not, you’re in the best of times to get on track with your finances. There’s not only a wealth of information out there, but a vast array of tools to help manage and grow your money over time. With all that’s available, how will you start on the road to financial freedom?