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A Few Simple Concepts that People who are Good with Money Know

We all know them. We’ve been friends with them; we work with them. The savvy savers, the prepared people. They seem so relaxed and confident. Their kids have college funds, and their retirements are all set up. Meanwhile, you’re stressing about bills every month and scrambling to make your minimum credit card payment. So, what exactly do these money wizards know that you don’t?

Actually, it’s likely that they’ve absorbed a few simple concepts—ideas that you can learn too! These concepts will be lessons you can use throughout your life.

If you want to know how to be good with money, you’re in the right spot. Here are a few key things that people who are good with money know:

  • Budgeting is your friend.
  • Setting goals can help get you where you want to go, faster.
  • A good credit score opens more doors.
  • Deal with debt ASAP.

Read on, as we unpack these ideas and help you on your way to financial freedom.

Budgeting is your friend

You, too, can be someone who “knows how to be good with money.” It all starts with a budget. Put simply, a budget is a plan for how you spend your money. Creating a budget can help you spend with more purpose: making sure you pay your bills on time, helping you cut back on unnecessary expenses, and giving you a plan to reach your goals. People who are good with money also regularly evaluate their budget to track progress, create new goals, and make adjustments.

But, how do you set up a budget? Start by figuring out exactly how much money you have coming in each month. Then create a few categories (for example: food, entertainment, bills) and figure out how much you’re spending in each category. Now, go through each category and set lower limits. (Some categories, such as rent and bills, will be fixed; look to save in the other categories.) Finally, think creatively about where you can save in each category. For example, do you really need to eat fast food three times a week? Eat homemade snacks instead, and you could save $100–$200 per month! For more tips, check out this budgeting blog post.

Setting goals can help you get where you want to go, faster

People who are good with money aren’t just focused on the present—they’re also focused on their future. That’s because if you know where you want to go, it’s a whole lot easier to get there! Smart money people set goals, and they regularly track their progress. They use discipline to stick to their budgets. They’re patient, and they aren’t impulsive. They know that long-term needs are more important than present-day “wants.” Setting goals can help you ensure your everyday actions are aligned with your larger aspirations, allowing you to stay motivated and make more progress. 

But people who are good with money don’t just set hazy goals. Their goals are concrete and measurable. So, what does a good goal look like? Make sure your goals have definite numbers attached to them, and a trackable time frame. And make sure they’re realistic. For example, remember the fast food money we saved in the last section? A good goal might be, “I’ll take the $150 per month I’m saving from not eating fast food, and I’ll put it into my savings account. In one year I’ll have $1,800, which I can use to set up that amazing home theater system I’ve been dreaming about.” As you near your goal, you’ll likely even find yourself saving more just to get there quicker. In this way, good money habits lead to more good money habits.

Finally, it’s important to keep setting new goals as you achieve the older ones. Don’t get complacent! Being good with money is a lifelong endeavor, though it does get a lot easier the more you practice.

A good credit score opens more doors

Lenders use credit scores to determine whether you’re a risk to lend money to. So, the better your score, the more confident lenders will be in letting you borrow funds. More than that, when you’ve got a good credit rating, lenders are more likely to offer you better financing options such as a lower interest rate. That’s why people who are good with money put in the effort to improve, maintain, and monitor their credit scores.

There are few ways to do this:

  • Pay off large amounts of debt, like credit cards and loans.
  • Make regular monthly payments on a credit card. Payment history is one factor that goes into calculating your score.
  • Monitor your credit report. You’re entitled to one free credit report per year from each of the three major credit bureaus (Equifax, Experian, and TransUnion). We recommend spacing these out, instead of getting all three at once. 
  • Review your credit card statements. This will allow you to dispute any errors before they become official or make it onto your credit report (after which, they can be harder to resolve).

Deal with debt ASAP

People who are good with money avoid taking on any unnecessary debt. If they pick up some debt, they make a plan to deal with it ASAP. Resolving debt can help free up income to go toward your financial goals. It can also boost your credit score, and provide some much-needed peace of mind. However, for those who have an overwhelming amount of debt or those who are struggling to make their payments each month, this can be easier said than done. If this is you, we want you to know that there are options.

CreditAssociates has helped thousands of people just like you become debt-free for less than they owe. Our certified debt consultants can walk you through our process and provide a free, no commitment debt evaluation to see if we’re a good fit for you. We’ll provide a personalized plan that could help resolve your debt in as little as 24-36 months, giving you the financial freedom you deserve. Fill out our online form or give us a call today at 1-800-983-6693.