Spring into Superior Financial Health with these 5 Tips and Tricks
At Oakmont Capital Services (OCS), we work with business owners nationwide to finance equipment. Part of the loan process is reviewing the personal credit of a guarantor (a.k.a. the person “guaranteeing” the loan payments). Although a personal credit profile review is just one element of OCS’ process, it’s crucial to ensure one’s credit score is good (or even excellent!). How you spend (or save) money impacts your score and financial health, so you want to establish a balance when it comes to earning, spending, and saving.
Saving is the most important thing you can do to ensure a secure financial future. But sometimes, it’s easier said than done. A 2022 study by the State of Personal Finance revealed that 36 percent of Americans have no savings, and another 19 percent have less than $1,000 saved. If you’re already saving, you’re ahead of the game. If you’re behind the eight ball, now is the time to start small. It’s important to have cash reserves for both personal and business emergencies – this “cushion” will help you maintain your credit score over time by making on time payments and avoiding opening additional credit cards or lines of credit.
Incorporate these five pointers into your everyday life to positively impact your finances!
Tip 1: Perform an Internal Audit
Budgeting can feel overwhelming, but it doesn’t have to be. The best way to budget is to physically have the information in front of you, whether on paper, in an Excel sheet, or within an online budgeting tool. Review your credit card statements, utility bills, rent/mortgage, and other recurring expenses to understand your needs vs. wants. Then, evaluate if there are places where you can save instead of spend.
Tip 2: Reduce Credit Card Debt
Around 36 percent of Americans struggle with credit card debt. It may seem impossible to overcome, but you can free yourself from debt with intentional management and patience. An excellent place to start is to:
- Reduce credit card spending and use cash or a debit card.
- Focus on paying off high-interest debt first.
- Document your debt and how much you owe. This way, everything is in one place and will become easier to manage.
- Create a game plan; after writing everything out, determine what needs to be paid off first. Decide how much money can be allotted to each card monthly to pay down debt.
Tip 3: Limit Expensive Habits
Changing daily habits might disrupt your routine but reducing or eliminating “small luxuries” (like daily coffee runs, take out for lunch or dinner, etc.) can help you save significantly. Consider redirecting the money you would normally spend on convenience items towards your business, either reducing credit card debt or saving for a project that could take your company to the next level. Trade your donuts for dollars – literally – by saving instead of spending!
Tip 4: Cancel Automatic Subscriptions
We live in a world of streaming content, meal delivery kits, gym memberships, and many other subscription-based services. It is likely that subscription services you’ve previously signed up for out of convenience (and might no longer use) still appear on your monthly credit card statement.
Manage personal (and business) subscriptions with a free app like Mint, eliminating the hassle of keeping track of current subscriptions. Among other features, these apps will sift through all recurring charges, and you can choose which ones, if any, to cancel. These apps also have bill pay reminder features to ensure monthly statements are paid on time, contributing positively to your credit score.
What is the budgetary trifecta? It includes a high-yield savings account, a retirement fund, and an emergency fund (which should cover 3-6 months of expenses). In short, the “trifecta” ensures you’re saving for the future.
Create your own trifecta by opening a high-yield saving account. This way, you can earn interest faster on your savings. If you’re self-employed, speak with your accountant regarding a Simplified Employee Pension Plan (or SEP). Once you have some savings accrued, consider opening a Certificate of Deposit to earn additional interest over an extended period.
With these tips and tricks, you will be on your way to establishing a healthy financial tomorrow and an impressive credit score. The best place to invest your money is in your (and your business’) future!