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Why It’s Important To Up Your Credit Score After Graduation

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One would think getting and maintaining a good credit score ends with your education but life has a bigger plan for you as you realize you having a consistent credit score which is good, is important in your finances.

You’re young and probably have no use for loans right now but it is paramount that your financial credit score if very good as it makes it easier to get what you may need later on in life.

Getting a good job, taking loans from the banks/schools, having a home, negotiating for better interest rates, buying a car and many more, all require you to present a good credit score in order to enjoy these benefits.

…and it’s not too early to start…

What is a Credit Score?

A credit score is a single number that represents how dependable you are from the view of someone who would lend you money. Basically, you have to prove yourself as an individual with reliable financial history and this can be done by having a high credit score.

Your credit score can be known through credit reporting agencies, which are businesses whose job is to collect information about your financial behavior. They are most concerned about three major things which are:

  • The money you’ve borrowed
  • The amount of money you owe
  • Whether you’ve been making your payments

What Do You Need A Good Credit Score For?

It’s easier to get a loan whether a mortgage loan, credit card, or an installment loan. Also, you tend to get a lower interest rate which a good credit score.

It can be easier to get (or keep) a job as some employers ask for and are allowed to check your credit scores. Any red flags in your credit history could potentially cost you your job.

It can help you launch your dreams into the entrepreneurial world as your personal credit history may be all you have to go on when you need to borrow money for a embryonic business.

These are some of the few reasons why you need a good credit score and history. Again, it’s never too late to start.

Have a lovely week ahead.

This article originally appeared on Piggybank.ng. Please follow them on Facebook , Twitter , and Instagram

Personal Finance

DIY: Your 5-Step Financial Planning Guide

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If you’re starting out to plan your financial future, it can get overwhelming. While many opt for a financial advisor to take care of the entire process, you can always handle your financial planning all by yourself (it’s simple, really) if you’ve got the right tools.

For starters, here’s what you need:

1. Set Goals!

Chalk out your goals—it can be short term, like paying off your card payment bills or long term, to meet expenses like retirement and your kids’ education.

Take a step back and do a reality check. Where do you stand now? How are your cash flows? How soon can you meet your expenses? Create a timeline to achieve these targets (and ensure you meet them!)

2. Do The Math

Calculate your total assets, after deducting the debts—and budget smart. Ditch your debt to stay away from piling on more to your list of financial risks. If you’ve got way too many debts to clear and it’s becoming increasingly difficult to keep track of them, here’s a great tool that comes in handy.

3. Build An Emergency Fund

Uncertainties can be hard, more so if they have a significant financial impact—be it an illness, job loss, or even global downturns.

To evade being stranded, ensure that you’ve built an emergency fund (a good start would be to keep aside six months’ worth of expenses), along with solid insurance coverage to back you up.

4. Hire The Right Agents

Apart from the general power of attorney, also ensure you lay out a directive in case a medical emergency comes up (if you’re incapacitated—we know, it’s not the best of thoughts to ponder over). To ensure you plan right, avail the services of an accountant, a real estate planning authority, and a medical power of attorney.

5. Earn Money On Your Money

The final step is to make sure you earn returns off your money. How’d you go about this? To start with, educate yourself. Read, read and read some more—research about what stocks, bonds, mutual funds, ETFs and other financial instruments do. Understand their risks, costs and how you can work on diversifying your investment.

It’s important to invest in something you understand.

Post this, set up your accounts to meet each of your goals—through monthly contribution plans, 401(k)s, low-cost index funds, IRAs or other savings plans. If all these details get you dizzy (or overwhelmingly hard), you’re better off with a financial planner who can do the research and investment planning for you.

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Personal Finance

INFOGRAPHIC: 12 Quick Ways To Save Money Every Month

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If you’re looking to scoop up a great deal or snag a shopping coupon that gets you the item on your checklist for less than its market price, you’ve got plenty of options to save big. Here’s a cheat sheet with quick ways to save money every month.

 

Featured image: Photo by Arno Senoner on Unsplash

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Personal Finance

5 Questions With Financial Expert Kara Stevens: Building The Right Money Mindset

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Believe it or not, becoming a millionaire doesn’t take much capital. It mainly a mindset shift as it pertains to money.

In order to unpack how to do just that, we spoke to financial expert, journalist and author Kara Stevens from TheFrugalFeminista.com.

In this Q&A, we discuss money management, the emotional aspect of money, and why you must heal your relationship with it first before you can learn to have more of it.

Let’s just talk about it out the gate. What’s the biggest money challenge you see in the people you work with?

I see so many things when it comes to money challenges—from fear of looking at bills to avoiding having important yet difficult conversations with their family members about money. I’d say the underlying challenge is an ambivalent relationship at best and a harmful relationship at worst with money.

We walk around usually unaware of our thoughts about money so our decisions are on autopilot and unexamined. This becomes a problem when you have goals of wealth but your actions and thoughts work in opposition to those goals.

You mentioned “financial dysfunction” and bad money habits being passed down from generation to generation. What are some that you see and how do you break them? (feel free to incorporate own experiences here)

Some of the habits that I see include living beyond one’s means and using credit cards and payday loans to subsidize lifestyles.

That’s a tricky one.

I also see the other side. People who hoard money in fear of being poor and who ironically keep their money in a low-yield savings account that will eventually erode its purchasing power.

Or inflation, which literally eats your money alive. So how do you break the money dysfunction?

Breaking free of money dysfunction begins with awareness. You have to acknowledge that you have a problem and commit to change. Even when there are setbacks.

I think the next step is seeking help whether through reading and educating yourself if you’re a self-starter or seeking support from a professional or a mentor that can guide you through your goals and offer feedback and accountability.

And finally, I think creating simple plans and goals that can be easily achieved and tracked helps you stay committed and motivated to improve your relationship with money.

You talk about “the link between self-worth and net worth.” What do you mean by that?

Usually when people hear that, they think I mean that more money makes you better or feel better. That’s not what I mean. When I say there’s a link between self-worth and net worth with respect to how we treat money. In other words, when you realize that you are enough, so you don’t have to overspend anymore or hoard money because you’ve reached a level of financial security.

Almost like being at peace with who you are financially?

Yes. How you manage your money—meaning what decisions you make around spending, saving, giving, and investing. This message is specifically those of us with money management issues and not income issues. Money management is for those of us that have enough to meet our needs, but our spending decisions keep us from making progress in our finances.

In other words, building wealth.

Right. Income issues and issues around generating wealth stem from structural inequalities. For instance, gender-based pay gap, race-based pay gap, predatory lending and so on. There is definitely an overlap when the discussion is that they don’t have enough income to manage.

Your book is called Heal Your Relationship With Money. What is it that people need to heal and why 28 days?

I think people mostly need to heal their past financial trauma from childhood, across the board. Whether you lived in poverty or privilege, there may have been beliefs passed down to you that make it hard for you to overcome financial self-sabotage.

This comes in so many forms from buying the cheapest foods because you don’t want to spend the extra money, to believing that the opposite sex is your best financial plan.

Healing can happen in a short period of time—like 28 days—when there are actionable steps and accountability. The book offers the space to engage in deep metacognition—meaning thinking about your thinking—while simultaneously offering bite-sized and tangible action steps.

What’s the biggest piece of money advice you can give someone who’s starting from scratch and doesn’t know where to go?

I think the first place to begin is to take inventory of your money mindset. Assess and examine your thoughts and subsequent decisions that stem from that train of thinking.
In doing so, you’ll be able to cultivate financial self-awareness which you’ll need to replace those thoughts and actions with ones that align with your financial goals.

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