As the shift to teens workers continues, the landscape of the financial world is having to shift with it. Younger and younger people are eligible for credit, and the major card companies take advantage of this, and send out mass mailings offering cards. Starting now with smart credit habits will prevent future problems, and also provide you with the security of having money when you need it, as well as having some for fun.
Making habits is something we do daily, but an awareness of what habits we are developing will go a long way to avoiding having bad spending habits that we later need to break. Smart credit habits are simple to learn, and if followed faithfully, will be a benefit when you are ready for major purchases later in life.
Habits to build
These are habits you have likely heard many times. They are vital for your future credit health, and need repeated once more.
- Monitor your credit. With all of the data breaches happening all over the world, this is a vital part of the smart credit habits to develop.
- Pay your bills on time.
- Don’t overspend.
- Pay yourself first.
- Educate yourself about credit, and how it is currently calculated.
- Avoid giving out personal information that may let someone access your credit.
Followed carefully, these will secure your credit information, provide you with a growing emergency fund, and gain you positive entries on your credit reports. After following these basic rules, build on them for the future, as better jobs and more money -as well as more responsibilities and necessities – come into your life. Forbes has an excellent article on the modern need for smart credit habits to be established and continued until retirement age.
Money for the future
- Credit is now everywhere, and the way we need to think about it is changing. There have been financial breakdowns, and break-ins. Credit may be calculated differently than in the past, and it is worth spending a few minutes on the internet or with your bank to make sure you are aware of what changing laws and local situations are affecting your credit available.
- Savings can be difficult. An item from a rent-to-own company is expensive, but try this trick. Make double payments! Not only will this cut the amount of interest you are charged (even the rent-to-own companies have interest charges, occasionally more than average), you will gain the satisfaction of having the item paid off, you can now add that amount you have been paying to a savings account until the term of your contract. You have done ‘without’ this money already, so saving it will be easy. And you have a larger savings account, plus the interest the bank pays, at the end of the contract period.
- Smart credit habits will allow you to be aware, and react to anything that seems off on your credit score. Some of the major card companies are partnering with credit agencies, and will allow you to view your score on a monthly basis. Rather than the old once-a-year that was the standard advice, this is now a wise thing to do. However, be aware that checking it manually may affect your score!
- If you see something that you do not recognize on your credit score, you need to take immediate steps to stop the problem. Most banks and other institutions have ways to report potential problems, either after the fact, or real-time, such as placing a hold on your charge until they speak to you if it is activity from a location or shop you normally do not go.
- The hardest habit may be to pay yourself first- this smart credit habit is difficult, especially after not working for a while. Setting aside money for savings, when you know that every penny has one or more demands on it is a real test of self-discipline. But even $20 a month will add up, and allow you to have a bit of savings. Once you get the immediate needs paid down, the amount should be increased-similar to the tip above on rent-to-own companies. This will keep this smart credit habit in play, and allow you to build your emergency fund where you can get to it if needed.
Once these smart credit habits are established, you will have a good basis for your future: your credit score will reflect positively on you, and will be a base to build a future on. With a small amount of patience and work now, you will have a workable budget and savings that will help you go forward and live your life with the financial security that those who do not have these habits will not.
Smart Financial Habits To Start (And Stick With)