By Novi Wealth Partners
Credit scores and budgeting might be no one’s favorite topic (at least when you’re first starting out), but they’re the first steps toward building financial wellness. Having a good credit score gives you opportunities like purchasing the home you want or getting better insurance rates. And budgeting keeps you on track to spend wisely and save for the important things in your life, whether that’s an emergency fund, an exotic vacation, or even an early retirement.
With increasing pressure to build financial stability amidst a chaotic world, here are 3 quick tips to improve your credit score, better your budget, and boost your savings.
1. Pay Bills on Time and Keep Balances Low
Credit scores are tough to build but easy to wreck. Your credit score is determined by several financial factors, such as the length of your credit history, the total amounts you owe, and the number of new credit accounts you’ve opened. The largest percentage of your FICO score (35%) is based on payment history, or your consistency in making payments on time.
So, if you have multiple missed payments, especially payments that have been sent to a collections agency, these can have a devastating impact on your credit score. (1) If you’re working on improving your credit, start by making sure that you’re paying your bills on time—all of them.
Of course, paying your credit card bills on time is important and can save you expensive late fees, but late payments on your utility bills and mortgage payments can also impact your credit score. If you have trouble keeping track of different due dates each month, add reminders to your calendar. Even better, set up automatic payments through your bank account. Then you can rest assured that all your bills will be paid on time and your credit score can increase.
2. Make Your Budget Realistic
Budgeting is one of the most common strategies for building financial security. Budgeting can reveal wasteful spending habits, curb temptation to spend on nonessentials, and track your progress toward savings goals.
However, a lot of people fear budgeting and therefore don’t do it. Hard data showing where you’re “in the red” can be demotivating and create a feeling of hopelessness. But budgeting is also empowering. Once you’ve spent time tracking your expenses and understanding where your money actually goes, you can take more control over your spending and instead decide where you want your money to go.
Budgeting doesn’t have to be all sacrifice. Budgeting is highly customizable and should take into account your values, your desires, and yes, leave room for you to spend extra money on nonessentials that you enjoy. In fact, budgeting can be freeing because rather than stressing about whether you can afford another dinner out, you’ll know for sure. So, build in categories for the nonessentials that bring you joy, and make your budget more realistic. One other little trick you may want to try, call it a spending plan. Prioritize what is important to you and anything that doesn’t make it within your spending limits doesn’t get purchased. Sorry, taxes are not a choice.
3. Give Every Dollar A Job
Speaking of budgeting, how many times have you set a savings goal but then had no money at the end of the month to actually put toward the goal? If you wait until the end of the month to put your leftover dollars into a savings account, it’s more likely that you’ll have spent those dollars on unnecessary extras throughout the month.
To break this habit, start by allocating a certain amount of dollars to your savings goals the same day you get paid. Then you know that money is already spoken for and will be much less likely to spend it on an overpriced coffee or expensive night out. By giving your dollars a job, it’s easier to see what you’re sacrificing the next time you’re tempted to go on an unplanned shopping spree.
We tend to find that the people that look further into their future for impending expenses are much better prepared. If you wait a month before retirement to consider how you will fund it, you will likely not have sufficient funds.
We Can Help You
Ultimately, you want your money working for you. To help get you on a positive financial path, it may be time to partner with a financial planner like Novi Wealth Partners. Not only will we help you set realistic financial goals, we’ll also help keep you accountable to those goals and optimize the wealth you’re building. To get in touch with us and start on a path to better financial freedom, call (609) 921-7002 or email info@noviwealth.com.
About Novi Wealth Partners
Novi Wealth Partners is an independent, fee-only comprehensive financial planning firm dedicated to empowering clients to discover their definition of true wealth while providing the confidence to achieve it. With 20+ years of experience, we have found that most people don’t care about money, but instead, they care about what money can do for them and their loved ones. As a result, we focus on guiding our clients to find their unique vision for their life and developing a plan to help them live out their values. Our goal is to truly understand our clients on a personal level and help them navigate life’s many changes.
We are located in Princeton, New Jersey and we service clients both locally and nationally. There are four CERTIFIED FINANCIAL PLANNER® practitioners in the firm, all of whom are members of the prestigious National Association of Personal Financial Advisors (NAPFA) and the Financial Planning Association (FPA). We prioritize a team-based approach, which allows us to deliver comprehensive financial planning, investment management, tax planning advice, retirement planning, estate planning advice, risk management advice, and concierge level wealth management. We are committed to providing each of our clients a level of service as unique as they are and we are proud, as Fee-Only™ financial advisors, to offer unbiased financial expertise. To learn more about Novi Wealth Partners or to get started on your financial journey, visit our website or connect with us on LinkedIn.
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