The third Thursday in October is National Get Smart About Credit Day. Super exciting stuff, right?! Maybe to those of us that get super nerdy about money and numbers. But to most people, credit is a big, bad, scary word.
Since the majority of people are terrified to talk about credit, kids grow up not being prepared to deal with it as young adults. So I’ve put together a few tips to use and share with your kids as they grow up to learn how to navigate their personal finances:
- Set a budget. Even if it’s a very simple budget showing how much you will make, what you typically spend your money on, and a balance. Don’t let the balance go below zero!
- Don’t spend more than you have. Is this the same thing as number 1? Basically. But it’s THAT important! Find yourself over-spending? Take out your spending money in cash, and don’t spend more than what’s in your wallet.
- Use credit cards smartly. Start slow – begin by only using your credit card for one or two things that you purchase regularly, like gas or coffee. Once you have proven that you can use your credit card and pay it off each month, add on another category.
- Don’t use your credit card for things you can’t really afford! Don’t stray from your budget just because you are using your credit card.
- Credit card shop! You want to search for a card with low annual fees and a low interest rate. Also, the real reason we all use credit cards, credit card rewards! Look for a card with rewards for things that you enjoy. Do you want travel rewards? Cash back? Disney? There’s a card for them all!
Life happened, and you over-spent. What next? Put a plan in place to pay it off as quickly as possible. Calculate how much you will pay each month to pay it off, and add this amount to your monthly budget.
Hint: you may have to sacrifice your daily Starbucks, but I promise you will survive!
Credit card debt grows quickly and can weigh heavy on your shoulders. If you cannot put a quick plan in place to pay it off, ask for help. Personal finances can be intimidating, but they don’t have to be! Staying organized, using these tips, and sticking to your goals will put you on the path to financial freedom.