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How To Be Financially Fit In 2018

January 24, 2018

Growing your finances and being financially free is a major goal for just about anyone. But being real about our financial situation and credit score can be daunting. We spoke to financial org Envision Inc. to help us take those first steps to getting our budget together.

What are some easy ways to look at our budget?

Print out your bank statement each month and get two highlighters, using one highlighter for mandatory bills in one and another for expenses you don’t really need. This is a great purging exercise to really look at where your money is going, and get real about what you’re spending and why.

What is the 50/20/30 rule? How should millennials apply this rule to their life?

The 50/30/20 rule splits your pay income into three categories. 50% of your income should go towards your essential needs like rent, utilities and food. 20% of your income should go towards your savings and debt. This includes savings plan, debt payments and emergency funds. The 30 percent is for your personal wants. This isn’t just for trips and shopping, but rather life necessities you enjoy like your cell phone plan with unlimited data, gym memberships, your daily cup of Vente Caramel Machiatto at Starbucks, hair/nail maintenance etc.

However, Envision Inc. says that for millennials just getting their feet wet in their careers, how you divvy up your three categories may be different based on your needs. For example, if your debt is at an all-time high and collection agencies call you more than your mom, then you may want to up your debt repayment from the 20% to 30%.

How can I improve my credit score? Are there any tips/tricks for jumping my credit score?

Paying off one of your credit cards in one large lump sum can increase your credit score, however it’s important to still keep the card open and use it sparingly so the account doesn’t close out. Building credit history is important for the long haul, so having something on your credit report to show you can make timely payments is a good thing.

There’s also a 30% and 20% rule for credit cards, which is to not spend more than 30% of your balance, and to keep your credit card balance 20% below your credit limit.

What are some things one should look at when opening a credit card?

You should be looking at the interest. Envision Inc.  recommends opening a card with a smaller bank or union because their interest rate is typically lower than a larger chain bank.

Also, your credit card maximums shouldn’t be for under $500. If you have an account from college or your younger days that had a $500 or below credit limit, then you should talk to your banks about increasing it. This will also help you from hitting that 20% max so quickly.

If you do want a card for a low amount to start out, then you should get a secure credit card. Secure credit cards are like prepaid cards. This is typically if you don’t have a credit card history, but you should look into increasing if this is your case after you’ve built some credit.

How can one get involved in stocks and bonds? What are the pros and cons of stock investments?

Do your research firsts. Realistically, stocks for amazon and apple are expensive for most of us and can be a big gamble.

You’re investing your money and will not get it back, so newbies should start off small and build experience before going big or going home.

Mutual funds, a package/bundle of different companies all mixed into one at a single rate is a good route for beginning investors.

And while this may seem obvious, it’s important to say that you should have savings first before buying stock in case you need to save on having something in an emergency.

Stocks and bonds are not liquid; it takes more time to get cash because you’d have to sell it or wait until it matures before you can get your money – so having something else in the bank to fall back on is crucial.

What type of financial assistance/savings plans should we be looking for at work

The possibilities at work are endless, no matter where you are. Some companies may even offer stock depending on your position or provide it at a cheaper rate. This is typically corporate, publicly traded companies like Verizon. Speaking with HR representatives your program has.

Also some companies are linked to other companies that are linked towards savings for your telephone bill etc.

However 401K, IRA and Roth are all plans that our jobs may have (401k is before taxes, and Roth is after taxes and helps lower your income if you don’t want to spend to much on your taxes).

The earlier you stay with a program the better, so you should join as soon as you can. And you won’t even have to stress over it, because our job will match your plan. Also you can rollover your company to somewhere else – most jobs have other companies like Vanguard watching your 401k plan.

Should I have more than one savings account for different savings needs? Are there any benefits to this? Disadvantages?

Envision Inc. recommends to have two savings account: one for primary savings, and one for a smaller purchase (like that designer bag you’ve been eyeing!).

Note: Don’t have your savings account linked to your primary checking account, it’s too easy to transfer money over.

To make this easier, you should check if your job will let you divvy up your paycheck to different accounts. This way, you can have your direct deposits going to your different checking and savings accounts.

What are some helpful apps or websites for saving money?

Mint and Digit are two apps that track your spending by categories, and Acorn is a good app for building small investment portfolios.

But some of the most simple things we can do is check our bank accounts weekly or monthly and check out our credit score on sites like Credit Karma monthly.

For more financial tips, check Envision Inc. out on instagram @_envisioninc

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