Personal Finance Basics

Personal Finance Basics

As you travel through life, the importance of personal finance management should become increasingly clear. If you ever want to buy a house, start a business, lease or buy a car or even get insurance, it will become immediately obvious if you haven’t been careful with organizing your personal finances. This is because there are three credit agencies (Equifax, Experian and TransUnion) that track your credit transactions from the first time you get a credit card or loan and assign scores based on your payment records. If your personal finances aren’t in order, your credit scores will reflect that fact.

Tips for Organizing Personal Finances

The following tips will help when it comes to organizing personal finances and keeping your credit in great shape:

  • Pay your bills on time A full 35% of your credit score is based on timely payments, so you should make it a top priority to pay your bills on time.
  • Subscribe to a credit monitoring service Your credit report determines how favorable the rates will be when you finance major purchases, so it’s your key to lifelong savings. That’s why you should get a credit monitoring service that will alert you to any changes made in your credit records. Monitoring for errors or identity theft will help ensure that your credit report is always in good shape. You can download the Credit Karma or Credit Sesame app to your smartphone to track your credit score.
  • Keep money in a savings account Although it might seem obvious that you should save money, the importance of personal finance resources such as a savings account can’t be overstated. Your good credit can be wiped out quickly if you don’t have a nest egg to fall back on should you suddenly become ill, lose your job or have another type of emergency. This makes it essential to have money in the bank at all times.
  • Comparison shop You’ve heard the old adage, “a penny saved is a penny earned,” right? Obviously, the same principle applies to dollars when it comes to your personal finances. That’s why it’s a good idea to comparison shop for products and key services, such as Internet, car insurance and TV. Lowering the amount you pay for products or services you’re going to buy anyway is just smart. Thankfully, comparison shopping sites now make it easy to compare prices. They also can help you save even more by offering “bundled” packages, which means you get reduced pricing across multiple categories of products or services. The ease of using a comparison shopping site, plus the opportunity to save even more through bundling, make comparison shopping an important strategy for improving your personal finance bottom line.

About Rick Doney

Rick Doney is a co-founder of Consumer Authority and Lifetime Entrepreneur. Expert on real estate, home improvement and other topics.