You don’t have to be an accountant to be financially savvy. Follow these basic budgeting tips that anyone can follow.
1. Pay your bills on time.
Many people forget to pay their bills on time, not because they don’t have the funds to pay them but because they simply forget. But there are consequences to making late payments — while one 30- or 60-day late payment won’t impact your credit too negatively, just one 90-day late payment can damage your credit for up to seven years. Use a bill reminder and organization service like Manilla.com, which will send you reminders when your bills are due so you never pay late fees.
2. Work toward becoming debt free.
The average loan debt of U.S. households is decreasing, according to recent data from Hearst-owned account management service Manilla.com, which found that the national average student loan balance was about $12,814 at the end of June, down from about $12,826 at the end of March. The average loan payment also dropped nearly 8 percent during that time period, from $121.66 to $112.
In order to pay down your student loans as quickly as possible, make more than the minimum payment each month so that you avoid paying more in interest over the long term, and make sure to make the payments on time.
One way to pay your student loans on time (and actually put more money toward them in the process) is to join Upromise by Sallie Mae, a rewards program from which you can earn cash back on purchases and apply the money directly toward your student loan balance. You can also ensure on-time payments by enrolling in automatic debit payments. Many student lenders, such as Sallie Mae, offer reduced interest rates for doing this.
3. Track your spending by using a basic budget.
I’m always surprised to learn that people don’t budget, but it’s a fact I hear more often than not. Basic budgeting is the key to avoiding overspending — if you know how much you’re allowed to spend and you track it, you’ll be less likely to find yourself in financial trouble down the road. Subtract your necessary monthly bills and expenses from your monthly income in order to determine how much you can spend on everything else each month.
4. Don’t spend more than you have.
Although this tip is money management 101, Americans somehow still have a hard time abiding by the principle that you can’t spend what you don’t have. The average U.S. household has more than $15,000 in credit card debt, according to statistics from NerdWallet.com, which means that many people are spending more than they can afford. If you haven’t racked up credit card debt by now, there’s no need to start — credit cards should be used only for building credit, so use them wisely and pay off the balance in full each month. However, if you’ve already acquired massive amounts of credit card debt, create a solid plan to get out of debt as quickly as possible. Start by paying at least the minimum amount due each month. Not doing so can result in the demise of your credit score, which can keep you from buying (or even renting) a home or getting a job.
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