Let me start by asking three questions. The first, do you know your credit score? Second, do you know how much you earn? And last, do you know how much you spend?
They might seem basic, and some of the answers might seem obvious, but you’d be surprised how many don’t know the answers to these simple questions. But let me ask this, if you don’t know these answers today, which means you’re probably out of touch with your finances, how will that affect your future?
Being able to answer these questions is important in order to stay on top of your money. Here’s why:
What’s my credit score? Staying abreast of your current credit score is important for different reasons at different stages of life. Ultimately, your credit score can affect being denied or approved for a loan down the road. So now is the time to understand your score, as well as what affects it — from making punctual payments, to the ratio of your total credit debt to total credit available.
How much do I earn? You might think this one is obvious... you’re the one looking at your paycheck, right? But it’s more than that. The ‘fully-loaded’ value of your salary or hourly rate carries with it much more than the money being deposited into your bank account — and fully understanding your benefits and how much you earn after taxes allows you to see your regular cash flow for what it is.
How much do I spend? We all look at our bank account statements, but truly understanding the flow of cash in and out of your accounts is something different. If you don’t understand where your money is going, for some even ‘disappearing’ to, start tracking every cent you spend. Doing so can reveal a lot about your spending habits — and whether your budget is realistic or not.
Alongside all of this, take a look at your goals in life. How does money relate to those goals and how will it help you achieve them? We all want to achieve our goals, so let them aid in guiding you to a better place — one where these questions are easy to answer and understand.