Managing money is so simple but many people make it complicated, why is that? Maybe they are afraid of money, maybe they do not feel that managing their money is that important, or maybe they just do not have any money sense. If you fall into one of those categories, we are here to show you how simple managing your money can be.
Money Management | Develop Your Money Sense
Step #1 – Know Your Limits.
Live below your means, live on less than you earn. You may have heard about that concept but maybe you never thought it actually applied to you. It does apply to you if you want to get ahead financially.
The first step you need to take to develop your money sense is to understand how important it is to live on less than your paycheck. It will take you a very long time to be financially fit if you do not live on less than you earn; that’s just money sense.
Many millionaires today are in that financial position because they developed the financial habits of always living on less than they earned. These millionaires understood that it’s not what they earned but what they kept or saved that really counted.
Step #2 – Understand Credit Scores.
Take your credit scores seriously; having good credit scores is critical in your financial world.
The financial industry judges you by your credit scores. If you have an improve credit score, a score above 750, you will pay less for goods and services. The number one reason why it makes good money sense to improve your credit score is because of the money you will save.
You need to take the time to learn your credit scores. You can order a free credit score once a year from each of the 3 national credit reporting agencies. Just do it, contact these credit reporting agencies to learn what your credit score is and make the effort to improve your credit score if need be. A good credit score is above 750, an excellent credit score is 850.
Step #3 – Understand How To Use Credit Cards.
How you use your credit cards have a big impact on your credit scores. You will lower your credit score if you carry credit card balance, make late payments, miss payments or have delinquent accounts.
You should never forget that the purpose of a credit card is to let you buy today and not feel the financial pinch until some time in the future. Credit cards also allow you to buy stuff that maybe you cannot afford. If you use your credit cards this way, your credit scores will show creditors that you are financially irresponsible and they will then lower your credit scores.
Credit cards are best used when you can pay off the balance in full every month.