CHECK YOUR FREE CREDIT SCORE

5 Money Management tips for youngsters

12-Oct-2016 written by : FSI-Team

It is never too early to learn the financial skills that will have a profound influence on your whole life. We bring to your table 5 money management tips to demonstrate how to handle money responsibly and achieve long term financial success.


To avail this, it is necessary for us to have a credit information report in hand before applying for any loan. This is because the bank grants the loan based on your credit history which is stated in your credit report. CIBIL TransUnion helps every customer during their registration process.

1. BUDGETING

The first sure shot way to manage money is to build a periodic budget and stick to it. This habit will help to control overspending, save money strategically and avoid debt problems. Based on the available funds, identify the expenses that can be met. Keep track of your spending and make sure that you follow the budget. You should also budget for savings for the future. This way you will not only learn the value of discipline but also prepare yourself for a future financial emergency, unanticipated medical expenses and retirement.

2. SET FINANCIAL GOALS FOR THE FUTURE

Identify the things you want to purchase once you save enough money for the same. Set a reasonable time to accomplish these goals. Having such clear goals in mind motivates you to spend money only when you really need it. It inculcates the habit of saving and makes one financially responsible. You can have short term goals (like buying a new phone), medium term goals (like saving money for the down payment of a car) or long term goals (like buying a home) but in the end they should be realistic.

3. USE CREDIT CARDS WISELY

Owning a credit card is pretty much empowering as it enables you to make all the purchases right now without having to pay for them immediately. But don’t get tempted to use the card on things which you cannot afford. It is a tool meant for your convenience but at the same time it needs to be used cautiously. After all it is borrowed money and if you do not pay off the balance in full before the due date, you will end up paying significant amount of interest. If you carry the balance month after month you will find yourself under a huge debt obligation which you cannot afford to fulfil. Another important thing which most youngsters do not realize is that if you use a high percentage of the credit limit or if you miss even a single payment it pulls down your credit score drastically.

In order to reap the maximum benefits of the credit card use it for only those purchases which you can pay back. After all it is not free money and the longer you take to pay off your balance the more it will cost you. A good practice is to pay off your entire balance in full each month before the due date. A record of series of on time payments will help in building a good credit history. Keep your borrowings to less than 30% of the credit limit you enjoy. Do not apply for a number of credit cards at the same time. These tips will help in building a good credit score.

4. WORK TOWRDS BUILDING YOUR CREDIT HISTORY

A low credit score can affect your chances of getting a dream job, owning a home, or acquiring loan for any emergency financial requirement. It is a key factor taken into consideration by the borrowers to assess your credit worthiness. Hence it is wise to start being serious about your credit score early on, because it takes years to build a credit reputation. Understand the key factors that affect your credit score and then take action to use credit responsibly. Paying all the debts on time (credit card bills, car loan or home loan EMIs) will go a long way in building a strong credit score.

5. REVIEW YOUR CREDIT REPORT

Your credit report is a summary of your past borrowing behaviour which determines your credit score. Lenders check it to analyse the risk involved in lending you money. Since it is such a crucial document that speaks volumes about your credibility you must ensure that it reflects your true picture. Review your credit report at least once in six months to check for errors. Today there are options to get a free credit report as well in case you are not willing to pay for it. If you find any suspicious entry or wrong information which is bringing your credit score down, submit a complaint online. Dispute it with the credit bureau and get it resolved.

These tips will help you follow a disciplined approach to spend wisely, save for the future, use credit sensibly and be a successful financial adult.


AROUND THE WORLD

STAY CONNECTED!

Don't miss a bit of Credit News
Join the FSI Force