This is your friendly reminder to take stock of your long-term money goals. And what better time than during Financial Literacy Month?
In honor of Financial Literacy Month, we're sharing some tips on how to achieve financial wellness amidst a gloomy economic outlook.
1. Automate Your Savings
"Paying yourself first" is a widely recognized concept in the field of personal finance management. Essentially, it means allocate funds to savings and retirement before any other expenses. A simple way to put this into motion is setting up an automatic deposit or transfer to designated accounts every pay period. Set a savings goal, and make monthly contributions to it just like you would with any other bill.
2. Handle Credit with Care
Your credit score is a crucial element affecting your financial wellness, so use it wisely.
Late payments, too much debt, and/or high balances negatively impact the loan underwriting process, meaning you could receive unfavorable loan terms and interest rates. Monitor your credit card utilization so your credit score is in good shape when you need a residential or commercial loan. According to credit experts, a good rule of thumb to follow is keeping your credit card utilization at 30% or under.
Remember, better credit = more purchasing power.
3. Refinance Loans If You Can
On that note, if you've taken steps to reduce your debt, it's possible your credit score has improved. A higher credit score than when you first took out the loan could get you a better interest rate through refinancing.
4. Build Your Financial Literacy
Knowledge is power, especially when it comes to financial decisions. Make sure you understand financial jargon like opportunity costs, retirement planning, compound interest, and more so that you can be confident you are making sound financial choices.
We've put together a glossary of financial and investment terms to know to assist you in building your financial literacy:
5. Rebalance Your Investment Portfolio Every Year
Your investment strategy can be influenced by shifts in the stock market and your own objectives. It's crucial to examine your investment portfolio on a yearly basis and make necessary adjustments to ensure it aligns with your current financial status / needs.
6. Consider the Opportunity Cost of Your Purchases
One of the most important lessons on how to achieve financial wellness is understanding opportunity costs.
Every financial decision you make means there is something else you can't do with the money spent. For example, spending money on a vacation means that you can't put that same amount of money towards savings, investments, or debt repayment.
What opportunity cost boils down to is how valuable the trade-off is.
7. Protect What You Have
Your identity and your belongings.
Fraud and identity theft can cause severe damage to your financial well-being. Protect important information like your bank logins, account information, social security card, and even your phone number. Report any suspicious charges immediately and replace credit and debit cards that are lost or stolen.
Repairing and replacing your belongings can also cause sever damage to your financial wellbeing. Invest in insurance when you can for cars, homes, and health. If you wreck a car you took out a loan to buy, and didn’t purchase insurance, you could be left with no vehicle, medical bills, and an auto loan you still need to pay off. These costly repairs can be avoided by being proactive.
8. Ask for Advice
Achieving financial wellness and improving your financial literacy requires ongoing learning efforts and a collection of trusted resources. Flagship has a team of experts ready to assist with any questions and a great selection of free online guides.