Nearly every dream you have in life is going to be determined by how you manage your finances and reach your goals. Life’s most important goals often include reaching a high-paying job, buying a home and having a comfortable retirement. You can get to those goals if you set your financial priorities right.
Avoid Debt You Don’t Need Right Away
Before heading down the road to debt and focusing on building your credit score, you should stick to frugal living and minimal debt first. Yes, a great credit score is a good thing, but having little or no debt at all is even better. It may be hard to avoid certain debt like a student loan, but if you focus on getting rid of that first, getting a high paying job and avoiding high living costs, you’ll be in better shape in the long-term. And it may be better to avoid using a credit card until you start building some cushion for your finances.
Make Sure You’re Focused On Your Credit Score
So long as you don’t take on debt you can’t afford, you’ll usually be in good financial shape. But when you do use debt such as a credit card or auto loan, you need to make sure you’re staying well ahead in your payments to keep your FICO score high. Higher FICO scores mean easier approval for future loans and credit cards, and lower interest rates on top of that. Remember, your credit score is affected not only by credit card payments but by credit limit usage as well.
Make Sure You Have A Good Financial Advisor For Investment Advice
While near-term financial goals can be met with setting aside savings here and there to cover emergencies, or to make a down payment on a vehicle or home, long-term goals like retirement are going to need investing in order to reach. The trap that some people fall into is relying too much on their 401k to get them through retirement. While it’s good to use that if your employer matches your contributions to it, that’s still money that can get taxed when you withdraw it. An IRA is another account you should have because this is money set aside that isn’t taxed. An IRA is something you should have the right advisor guide you through because chances are you won’t be too familiar with investment funds. Investment account management can require fees, but there are also options out there for those who like to manage their own portfolios.
The bottom line is your financial goals are met by a combination of keeping living costs and debt low, and having an investing plan for the future. It’s not always easy to know what you should do with your finances such as making budgeting and emergency payment decisions. But there are great personal finance resources you can tap into whether it’s a free online course or money app that can show you how you’re doing with your goals.