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Financial Health – Shaping up Your Pocketbook

One thing everyone has to do, but not everyone does well, is manage their finances. How you manage your finances is vitally important. If you manage them well, you will have extra money to save and spend. If you manage them poorly, you could go into debt and eventually be forced to declare bankruptcy. Below are a few tips that can help improve your financial health and shape up your pocketbook.

Track Your Credit

Financial HealthTo put your financial house in order, you are going to need healthy credit. Having a good credit rating is very important. If you ever want to obtain a mortgage, healthy credit is vital. It can determine whether or not your request for a loan from a bank is approved.  And if you have a poor credit score  even if you aren’t denied totally you will have to pay much higher rates costing you tens of thousands of dollars more over the life of the loan.  Thankfully, keeping track of your credit isn’t too difficult. The three major credit reporting agencies Experian, Equifax and Transunion are each required by law to provide you a free credit report once a year. Or for a fee you can check your credit score daily through different websites and services. You can request a report from all three at once but if you spread out your requests you can get one from a different one every four months.

Use Bank Accounts

One mistake many people make is living on credit. While it’s important to build a credit history, depending on your credit cards too much is a mistake. You’ll end up paying a lot of money for interest when you shouldn’t have to. Instead, you should take advantage of bank accounts. Setting up a checking account, for example, will allow you to spend money without incurring interest. You can even do this with a debit card instead of checks for maximum convenience. Placing money into savings accounts can also allow you to build a buffer for financial emergencies and long-term expenses.

Make a Budget

Overall, if you want to improve your finances, you are ultimately going to need to create a budget. This budget should include both your weekly expenses as well as your monthly expenses plus a fund for occasional expenses like new tires or water heater. It should include utility expenses, cable bills, groceries, medical expenses and any other costs you typically encounter. It should include extra money for entertainment and dining out so you don’t have to dip into other funds. Creating a budget is now a lot easier than it was in the past thanks to computer programs and smart phone apps that can help you quickly map out your expenses. Such programs can even tell you when to pay your bills so you don’t forget. The reminder can even be sent via text message to your phone.

Include Savings

Your budget should also include a set percentage of your paycheck that is placed into savings. Initially you should create an emergency fund to cover unexpected items. Once that is covered you should move on to things like college funds, retirement accounts or a stock portfolio. You need to plan it all out and update the budget as needed. The key to long term financial health is proper planning.

Overall, you need to be proactive to get a handle on your finances. However, if you plan ahead, use the right tools and track your credit health, you should be able to do a much better job managing your finances.

 

Rachelle Wilber is a freelance writer living in the San Diego, California area. She graduated from San Diego State University with her Bachelor’s Degree in Journalism and Media Studies. She tries to find an interest in all topics and themes, which prompts her writing. When she isn’t on her porch writing in the sun, you can find her shopping, at the beach, or at the gym. Rachelle recommends Deseret First Credit Union for more information on bank accounts. Follow her on Twitter and Facebook: @RachelleWilber; https://www.facebook.com/profile.php?id=100009221637700

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