Many young people are at a crossroads when it comes to their finances. If you are one of these young people, you do not need to worry. You are not alone. Read on to discover 7 financial basics every young person should know.
Get your free credit report
You are allowed 1 credit report from each of the credit bureaus every year. It is beneficial for you to get this report and check for inaccuracies in it. All errors on your credit report could be causing a drop in your credit score. These mistakes can be corrected. Just remember, it is okay to get your credit reports for free. There are agencies out there charging as much as $30 to get your credit report. You should not pay these agencies unless you exhaust the free credit reports.
Start saving for retirement early
The earlier you start saving for retirement, the more you will have when the time comes. It is a good idea to look into saving for your retirement by saving in a 401K. If you have an employer who will match your 401K contributions, contribute up to that amount. It will equate into free money for your retirement.
Credit cards are not free money
Many people think a credit card means free money. They can swipe now and pay for their purchases over time. That is not how it works, though. When you have a balance on your card, interest accrues. You may not realize that the interest that is accruing is creating a higher purchase price for the items you bought. Getting into the habit of paying off your credit cards every month will help your credit score. Besides if you have a rewards card, it will be beneficial for you to pay your balance in full every month.
There are tiers for your credit score
There are 4 tiers of credit scores out there. The higher the tier you are in, the better off you are. Every lender will have its own rules about where you fall within a tier. However, it is important to remember, there are many scales for credit scores. The standard credit score has 720+ being excellent. That means once you hit a 720 FICO score, you are eligible for all the best interest rates available. There is no pressure once you hit 720. You get the same interest rates if you are 720 or 800.
Keep track of your spending
Many think creating a budget and sticking to it is the most important aspect of money management. But, a more important component might be to keep track of your spending. Doing so will help you know where your money is going. You will then be able to fix any problem spending areas. A budget is a good idea, but if you are unaware of where your money is going, a budget will not do you any good. To keep track of your spending, keep all receipts for 30 days.
If you need help with any of these things or are curious about your credit and finances, feel free to contact Go Clean Credit today!