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Money Master or Financially Challenged? Five money markers that reveal your financial fitness.
Presented by Member One Federal Credit Union
With the inevitable uptick in holiday spending in sight, it’s high time to check in on your money management know-how. Many people might think they have a solid grasp of their finances, but there are certain key pieces you should have in place to truly be considered a financial pro. Below are five checkpoints to help determine if you’re really the money guru you think you are. You’re aware of your income and expenses.
If you track how much money is coming in and going out each month, consider yourself a smart money manager. Failing to be in tune with your income and expenses can lead to overspending and debt, or missed opportunities to make the most of your money through investing. If you need to improve in this area, start by tracking your monthly income and expenses over a period of time and watch for trends. Ideally, you’ll have money left over at the end of a month to put into savings or investments. If you’re consistently left in the negative, find ways to cut down on expenses.
You have a savings plan. Not only does this include having funds on hand to pay for emergency expenses, this includes long-term investments for a secure financial future. If your employer offers an investment plan like a 401(k), participate—especially if they match your investment. If you’re not investing and don’t know where to begin, your local bank or credit union is a good place to start. They can direct you toward low-risk investment opportunities. It’s never too early (or late) to begin investing. You’re debt-free or making progress on paying off debt. There’s good debt, like a mortgage
that provides a roof over your head, and bad debt, like credit cards near their maximum limit. Having some debt is fine, but
it should mostly fall into the good category. If you have bad debt, get rid of it as quickly as possible by devising a plan to pay it off. Start by tackling the largest balance with the highest interest rate first.
You’re aware of monthly bills. Similar to an awareness of your income and expenses, you should know what bills you’re incurring each month. Even if you have automatic payments established, you should know when bills are typically deducted from your account, the amount, and the terms of the purchases. Billing mistakes can happen, and it’s your responsibility to make sure you’re paying the correct amount or take action to correct the charge if necessary. You think about the big financial picture.
When do you want to retire and what investments will help you get there? How many years are left on your mortgage? How will you pay for your children’s education? You don’t have to make all the big financial decisions right now, but you should remain mindful of your overall financial health. If you always consider how every major purchase or investment impacts your overall finances, you’re more likely to make smart money choices.
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