Consider “buy now, pay later” platforms.
An exciting new way to become savvier with your finances is by taking advantage of platforms that allow you to shop now but pay later. This can be beneficial when you have a significant bill pending a payment that prevents you from spending money on other necessities. For example, let’s say your rent is due, but your refrigerator breaks down that same week. You can pay your rent as usual and take advantage of Cashew’s “shop now pay later” options to buy a new fridge rather than worrying about how to pay for an unexpected expense.
From household items to technology to beauty products, Cashew features various stores on their website that allow you to split the cost of products over time until they’re paid off. You even get to choose how many instalments you wish to pay over time which is perfect for those learning to budget their income and become more financially savvy.
Make a plan for your money.
Making a plan is one of the most important things you can do for your financial security. A budget or spending plan will help you track your income and expenses, identify areas where you can save money, and create goals for your future.
To create a budget, start by tracking your spending for at least one month. Write down everything you spend money on, including groceries, entertainment, bills, and debt payments. Once you have a good idea of where your money goes each month, you can start to make changes. If you find that you are spending more than you earn each month, it’s time to start making cuts. Consider trimming back on non-essential expenses like dining out and cable TV. You may also want to look into reducing your monthly bills, like renegotiating your mortgage or car loan.
It’s also important to save for the future. Set aside some money each month into savings or investments that can grow over time. This account could also serve as an emergency fund, which will help cover unexpected costs in the event of job loss or illness. Later, this money could be used for retirement or sending your kids to college.
Start investing early.
One of the most important things to remember when trying to build wealth is that time is on your side. The sooner you start saving and investing, the more opportunity you have to let compound interest work its magic. Investing early doesn’t just mean putting away money today; it also means taking advantage of dollar-cost averaging. This technique involves investing a fixed sum of cash into securities at fixed intervals. Buying investments over time reduces the effects that sporadic changes, unrelated to the underlying security, might have on their price.
In other words, by buying in slowly, you’re buying at what could be considered lower prices on average. And since investment returns are typically reinvested along with additional contributions, dollar-cost averaging can help accelerate your rate of return over time.
Know your credit score and improve it if needed.
Your credit score is a three-digit number that reflects your creditworthiness. Lenders use it to determine how risky it is to lend you money, and landlords use it to decide whether to rent you an apartment. The higher your score, the lower the risk for the lender or landlord and the better terms you may be able to negotiate on a loan or lease.
Achieving a good credit score starts with understanding what makes up your score and taking steps to improve it if needed. Your credit score is based on five factors: payment history (35%), amount of debt (30%), length of credit history (15%), new credit (10%), and type of credit used (10%). By monitoring these factors, you can work on building a solid credit history.
Becoming financially savvy is essential for a variety of reasons. Most importantly, it can help you protect yourself from financial scams and fraud and help you make sound financial decisions. Additionally, being financially savvy can help you build wealth over time and improve your financial stability.