Good financial health is key to a happy life. Poor finances increase the stresses in your life. Bad credit history can limit the options that you have for where you live. Landlords and loan officers check credit before making a decision on whether to approve applications. Staying on top of your finances will be helpful when making big financial decisions.
Unfortunately, the economy took a downturn in 2020 when unemployment soard and consumer debt grew to 14.6 trillion. The economic downturn destroyed the finances of many families and created lots of anxiety. The following steps will help you take control of your finances and reduce any economic anxiety you may have.
Increase Your Savings
A savings fund can reduce the stress that you may have when faced with financial emergencies like a home repair or illness. A savings account is a safety net that you can fall back on when you lose your job or suddenly can’t work. It is often recommended to keep three to six months of living expenses in a savings account. This is a lot of money for many people and a lot of money that they don’t have on hand. Most people take time to build up their savings account and start by setting aside a realistic amount each month.
Monitor Credit Card Activity
Credit cards are used by 83% of adults and have become an important part of your financial health. They provide access to emergency funds when you need them and help establish a credit history. Building up and keeping your credit score isn’t always easy, but it will impact your ability to take out a loan at a good interest rate. It is important to pay off your credit cards consistently in order to keep your credit score healthy.
Missed payments or partial payments will lower your credit score. It can be discouraging to have your credit score go down after a financial emergency, but the good news is that the score isn’t permanent. You can improve your score over time. Credit scores change as your finances improve. It is important to check your credit score at least once a year and see what you can do to improve it.
Track Your Investments
Prices have steadily been rising since 1991 due to inflation. The cost of goods has grown an astounding 4.6% in the last 12 months. Profitable investments can increase the amount of money you have and offset the detrimental impact of inflation. There is a risk with each investment, so It is important to regularly review your financial investments to see if they are earning you money or if they are draining your finances.
Regularly review your portfolio every few months to ensure that your assets are balanced and earning money. If you are holding an asset that isn’t doing well, you may want to consider letting it go. This is a good strategy if you sold an asset and made a profit. It is known as tax-loss harvesting. Selling an asset at a loss to make up for some of the gains that you had will reduce the taxes that you are required to pay.
Create a Budget
It is helpful to create a budget to stay on top of your finances. Make sure that the budget is realistic and achievable. If the budget is so strict that it is difficult to follow, it will be very discouraging that you aren’t reaching your financial goals. This can lead to negativity and possibly ditching the budget entirely.
When you create your budget for 2022, it must honestly reflect not only what you need but also what you want. Incorporate ways to reward yourself for meeting your financial goals so you stick with your budget. You may want to review the budget quarterly to ensure that all the finances are included.
Use a Financial App
Keeping track of your finances can be made easier by connecting your checking account to Thinkflow, a financial website that analyzes past transactions to help you identify spending habits. Thinkflow can help create a forecast of your cash flow by taking into account your income and spending patterns. Thinkflow also provides you with visual tools that will help you make adjustments to your finances and a list of side jobs to increase your income. If you are still running short on cash this year and in need of a convenient online loan, apply with Jora today.