Handling your finances can be one of the most difficult things in life, and all because the financial world is so hard to understand! It’s one big confusing place that is taboo to talk about and not often taught in families – or in school.
If you don’t work in the financial sector it’s important to educate yourself and be able to have your money work for you, rather than working for your money. After all, even just getting to grips with investing $1 can seem impossible until you make a plan.
It’s essential to work out and understand what you don’t know about your finances. Sure, you’re following a budget just fine, but there’s something to be said for being able to keep a relaxed eye on the way your cash is flowing. And in the interest of helping you stay in control of your bank account, here are some things to learn about your finances.
What An Interest Rate Means For You
Usually represented as an APR, the amount of interest you have to pay on certain loans and products, like a phone contract, can be very confusing. This is one of the key barriers that need to be removed from the financial world: what does your interest rate really mean for you?
It’s all about risk.
For a loan that’s ‘low risk’, the interest rate should be low. However, what makes a loan low risk? It’s about the borrower in question; how does your credit score reflect your money choices?
Similarly, there are two types of interest: simple and compound. Knowing the difference between the two will help you make better decisions over the lender you work with.
If you’re currently paying high-interest loans, Credible offers some of the best rates on personal loans to help you reduce your interest rates and lower your monthly payments.
How To Boost Your Credit Score
Boosting your credit score might seem like an impossible thing to do, but as long as you’re on time with bill payments, you’re going to keep it at a steady and average level. However, we want to aim a bit higher than that, and that’s where a seemingly risky element comes in.
You might want to take out a loan in any form here. Because if you take out some financing and then pay it all back on time, your credit score will shoot up! And that’s not the only advantage of taking out a loan or applying for a new credit card.
Indeed, you can read an entire list of The Advantages Of Taking Out a Loan right here. Debt doesn’t have to be a bad thing, and you don’t have to beat yourself up about as long as you know how to effectively manage debt to your advantage.
Just to be clear, if you’re living paycheck to paycheck due to high debt payments each month – debt is working against you, not for you.
Bonus tip: Did you know Experian has a program to help you boost your credit score by leveraging small monthly payments such as your Hulu or Netflix subscription? It’s true – Experian Boost is a free service you can use to help you quickly build up your credit score.
You Might Be Entitled To Financial Benefits
You never know unless you look into it! For example, more people qualify for unemployment grants than ever before, and these people simply think they don’t, without ever checking. So, they miss out on the money they could really use right now.
Make sure you know what you’re entitled to, as there are many free calculators out there to use to figure out if you’re owed any money in back taxes or other stimulus payments.
What you don’t know about your finances could one day damage your net worth. Make sure you keep facts like those above in mind.