November 25th, 2008
Basic Personal Finance Tips for Staying Solvent
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Being financially solvent means having assets that outweigh your liabilities, or having more real money than debt. If you want to stay solvent, you need to keep basic personal finance tips in mind at all time, making sure that your financial decisions are healthy and that you do not put yourself into debt. Here are some basic personal finance tips that will help you stay solvent financially.
When it comes to your personal finances, using credit wisely is one of the first steps that you can take. Credit cards and loans may be extremely convenient, but they can be just as equally destructive if used improperly. Using credit wisely is vital when it comes to getting the most out of your personal finances. For example:
You should constantly be focusing on improving your credit health and keeping your credit report clean.
When you first start out, your credit score is average and your credit report is blank. When you apply for and are granted credit or loans, this affects both your report and score. If you continue to make your payments on time, and you keep your balances paid down, your credit score will continue to grow, and your credit report will stay clean.
Not only is focusing on improving your credit health vital, but monitoring it is important.
There are three different credit bureaus, Experian, Trans Union and Equifax. These three bureaus come together to come up with a single credit score based on your three credit reports. Credit Karma can help you monitor your score by acting as your agent to the credit bureaus. Using Credit Karma will not harm your credit score. By monitoring your reports, you can make sure that no false information contributes to your credit score, which can be lowered if it is reported that a payment is made late or not at all. By monitoring your credit score and credit reports, you can better make sure that your personal finances stay in good shape.
Save and invest whenever possible.
Saving as much money as you possibly can and then investing it is the best way to make the money work for you. Saving money is absolutely vital for a number of reasons, including having an emergency fund, and having a nest egg in the future for buying a new vehicle, a new home and so on. Take a set amount out of each one of your paychecks and put it away, then invest the money once you have a certain amount saved to make sure that it works for you.
Make sure that you create and stick to a budget.
Begin by keeping a record of every purchase that you make to figure out how much money is being spent properly or wasted from week to week or month to month. Then create a budget, separating necessary expenditures from frivolous ones. With a proper budget, you can better maintain your money, making sure not only that your bills are handled, but also that you have left over money for savings, emergency funds, and entertainment expenses as well.
Combine these tips and you will take better care of your personal finances to remain more financially solvent.
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