The key to financial success is understanding how to manage your finaces. No matter where you are on your financial journey money saving tips and understanding how credit works will always be useful.
Money Saving Tips:
Saving money can be challenge for many people. To make your own finance jouney easier we recommend using an expense sheet. An expense sheet is a spreadsheet that details all your current and potential expenses such as rent, internet cost water and power bill, etc. By listing all your expenses in one place you can figure lots of useful information about your monetary habits and work towards cutting down on costs in non-essential areas. This sheet will give you a clear picture of your finances by putting your salary and expenses side by side. You can find lots of free expense sheet templates online or create your own to best fit your individual needs.
If spreahseets are not your thing, don’t worry there are also a lot of apps out there that can track your spending including some banking apps which you may already be using. Other apps though specialize in setting apart extra change from purchases or automatically deducting a predetermined amount of money from your check for you which can be cashed out at a later date.
Shopping smart is also another way to save money. Online shopping has become increasingly popular in the last few years which although extremely helpful in the quantity of items available to you can also lead to many unnecessary purchases. To help combat overspending online why not try using web browser extensions that help you save money. Extensions like Honey help you find coupons and automatically apply them for you at checkout. Other websites like groupon can also help you save money on experiences so you can enjoy going out without having to break the bank.
Understanding Credit:
With those money savings tips fresh in your mind lets dive into the world of credit.
There are actually three different varieties of credit. The first which many people are familiar with is called revolving credit and is most commonly seen with credit cards. This type of credit allows a money to be borrowed at any time but comes with a credit limit that restricts how much can be used at any particular time. You usually pay this back monthly and have to pay interest if you don’t pay off your bill in full every month. The second form of credit is called installment credit. Installment credit is a loan for a set, mutually agreed-upon amount of money with a fixed, regular repayment schedule. Items such as student loans, mortgages, and car payments are in the installment credit category. Lastly there is open credit which is best associated with a charge card.This form of credit allows you to have funds up to a maximum amount of credit at your disposal, with the caveat that you must pay your full bill back every month.
Now that we have credit basics out of the way lets discuss how to take charge of that credit.
- Use extra to help build your credit history
Extra is the first debit card that helps you build credit. An extra credit card is connected to your bank account so you can only spend what you have to make everyday purchases while simultaneously increasing your credit score. Using a card like Extra is great if you are a first time credit card user, looking to increase your credit score, or if you are trying to lower your APR rate.
- Understand your credit score
A credit score is a three-digit number that can fall in a range anywhere between 300-850. Wherever you fall in this range is how lenders assess the risk of lending you money, based on your credit repayment history. A credit score in the 300-579 range is considered to be bad by credit bureaus since people within that category usually fall victim to financial negelance by not paying their cards off partially or at all. Next, we have the 580-669 range which is average and where most new credit users fall if they pay their credit bill regularly for the first few months. A score between 670-739 is good in the eyes of the credit bureaus as it shows you have great financial responsibility and leads to benefits such as increased credit lines. A score of 740-779 which is a great standing will be when you start to see top tier benefits like lower interest rates when applying for new credit cards, loans, or buying a new car. Finally we have the perfect credit score range which falls anywhere from 780-850. With this credit score, you can easily pass any credit check, get favorable credit deals like low APR rates and any other previously mentioned benefits.
- Pay bills on time
It may seem obvious but paying your credit card bills on time every month is one of the most effective ways to raise your credit score. A smart tip to speed up the process is repaying your credit cards in full so that your credit issuer sees you have a stable income for monthly repayment and are not a liability to them which will lead you towards a fast track to getting that coveted perfect credit score. This tactic will also help in getting your credit issuer to increase the credit limit they grant you.
Knowing how to manage your money effectively will help lead set you up for future success. So remember to keep these tips in mind as you set out on your own financial journey.
Company Bio:
Extra was founded by Maximilian Hellerstein as a financial services company aimed at allowing people access to a line of credit. Extra is the first debit card that helps you establish a line of credit by compiling the purchases you made at the end of every month and reporting them to credit bureaus to help build your credit history. Extra can connect to over 10,000+ banks in the U.S. by using Plaid, to ensure that your banking information is safe and will never be stored. Anyone 18+ can apply since there is no credit check, and instead only a monthly payment fee that starts at just $7/month.
