Monthly utility bills, student loans and credit card payments can take a significant chunk out of your take-home pay. Add in saving for a home or a vacation and everyday living expenses and your finances can quickly spin out of control. Learning to manage your finances can help you budget properly, keep your credit intact and give you some security as you tackle life’s trials and tribulations.
Managing your finances starts with understanding your current financial status. Old debts will not go away and current financial problems can leave you struggling to keep your head above water. Drag out all of your bills and begin to assess your current obligations. Make a list of all of your bills, starting with the bill representing the highest balance. Use estimates for variable expenses, such as utility bills and living expenses. Include everything right down to parking fees, that morning cup of coffee and entertainment expenses. Reviewing this information and putting it all in one place can help paint a picture of your current financial status.
Learn to manage your debt responsibly. Get a free copy of your credit report each year. Annualcreditreport.com provides consumers with a free copy of their credit reports upon request. Review your credit report carefully for mistakes. Not only does reviewing your credit report allow you to catch mistakes, it also can alert you to possible identity fraud. The three credit bureaus, Experian, Equifax and TransUnion, keep details related to past and current obligations as part of your credit record. Details include payment amounts, your total balance and your payment history as it relates to each debt. This information can impact your ability to finance a home or car, open a new credit account or qualify for a private student loan. Highlight any past or current credit obligations that require your immediate attention, such as past due accounts or collection records. Keep your accounts current and make paying off past debt a priority when planning for your financial future.
Develop a plan to keep moving in a positive direction. Create a budget to help keep you on track to financial freedom. Compare your expenses with your current income. Plan to set aside enough each month to cover all of your expenses. With the remainder, tackle difficult issues, such as paying off past due and collection accounts. Remember to set some money aside in savings for a rainy day fund.
Part of managing your finances includes protecting yourself and your assets. Natural disasters, such as flooding, and unfortunate incidents, like theft or fire, can wreak havoc on your property and your finances. Protect your assets by purchasing insurance to cover your home and automobile. Keep a record of all of your assets, including electronics, heirlooms and furniture, in case a loss occurs.
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