Especially in uncertain economic times like these, people are always looking for ways to create and sustain financial health. Since there is so much that you cannot control it is critical that you understand the things that you can and focus your attention on those things. Beyond simply saving your money, there are ways that you can use your relationship with your finances strategically, ways that will improve your overall financial health. Below are four considerations for you to learn about so you can get started making the money you work hard for, work hard for you too.
Your credit score is just three little numbers however those three numbers really hold a lot of power. When you have credit that is unhealthy it signifies that your overall habits are also unhealthy while a higher credit score, of course implies the opposite. An unconventional way to improve your credit score is to use borrowed funds like loans and mortgages as tools to show that you are financially responsible and able to prioritize debt management.
Even if you are a cosigner on a student loan that is not technically for your use you can still improve your credit score this way. Being an Earnest student loan cosigner not only helps get a student approved for a loan but also establishes with the lender that you have the financial stability to back it up. You of course need to be sure that said student also has the responsibility it takes to handle this loan since if they default or have any other troubles with repayment that will not only fall onto you but also reflect negatively in your credit score.
One of the main reasons that people are always saying that investing is essential is due to the presence of compound interest. Not all investments will generate this type of interest however especially when it comes to planning for retirement you should be taking advantage of the ones that do. If you have no clue how to get started in investing consider hiring a financial expert to walk you through your options.
This person will want to go over your specific goals with you so that you can create a plan for your money that matches them. Going into an investment strategy without specific goals is a really great way to misuse your money, and that is obviously not the goal here. Keep in mind also that you should let this person give you a crash course in the emotional side of investing so that you understand that even the soundest investment is still going to fluctuate. Be sure that you determine your personal risk tolerance honestly before you start dedicating money to the market.
The term side hustle is not new, but it is arguably much more popular as of late than it has been. A side hustle is exactly as it sounds, a job that you do on the side of your main job to create extra funds for yourself. A side hustle, and passive income, however, are different.
Passive income is a stream of cash that you set up once and they are set to automatically earn a profit. Be prepared to spend some time setting this up though, as not all passive income ideas are get-rich-quick dynamics. Set your expectations realistically and do tons of research before you get started. Sometimes these passive income streams will require an investment up front so that is also something to consider.
The idea of tracking all your spending is absolutely not new however that does not make it any less essential. If you have no clue where your money is going then odds are that it is not going to the right places. Setting up a budget is one of the most efficient ways to understand your dollars and cents almost to the penny. If you do not already have one then you need to prioritize setting one up right away.
Luckily with the advent of FinTech there are websites, apps, and programs available to help you track your spending pretty quickly and easily. The initial setup might take a small amount of your time but once you enter all your recurring expenses, in some cases, you can sync your card and your app up together and have all your purchases automatically accounted for. Examine your habits after one month, and monthly thereafter so you can identify where you need to clean things up. If you are lucky, the found money that is in your budget as a result of tracking your spending can then be used to pay down debt, save for large purchases, or investments as you continue to work to improve your financial health overall.