Recently we held a seminar on How to Manage Your Finances. Attendees were taught about the importance of creating and sticking to a budget or spending plan, how to reduce acquired debt, and how to improve their credit score.
The importance of managing credit and controlling debt was discussed. Attendees were given a few creative ways to cut unnecessary spending, and how to pay off debt as quickly as possible. It was stressed to attendees the importance of why a good credit score was important -good credit helps you to build personal financial wealth, secure goods and services now – but pay for them later, it affects interest rates and fees you pay, and it can help you to achieve your short and long term goals. Seminar attendees were also informed that their credit scores were made up of the following information about them: 35% of your credit score comes from your payment history, 30% from other amounts you owe, 15% comes from the length of credit history, 10% from the types of credit used, and another 10% from new credit. A credit score can be improved by paying bills on time, keeping credit card balances low and paying them off in full when possible, not opening unnecessary credit card accounts, and by not closing unused cards – which can raise your balance to limit ratio and actually lower your credit score.
The budgeting portion of the seminar emphasized the significance of creating a plan for monthly expenses at the beginning of the month – and tracking it on the computer in an Excel spreadsheet, or by using a budgeting program such as Microsoft Money, online banking, or a mobile phone app. Regardless of the method chosen to create a budget, recurring or fixed monthly expenses should always be entered first, examples include: mortgage/rent; monthly utilities; and any debts such as auto loans, student loans, or credit card. Next, flexible expenses, or things you have control over should be entered – such as: entertainment, food, clothing, and household expenses.
It’s important to find a healthy balance between the power you have over money, and the power money has over you. A budget is often considered a spending plan, but it’s also a savings plan.
Stay tuned for future seminars at First Financial by visiting the event calendar on our website.