Small Financial Steps that lead to Big Success

It’s the beginning of the year, which means, for many people, making resolutions. Whether we keep them past January is for another post.

Perhaps you have made some goals this year to put you in a better position financially whether you are trying to improve your credit, save money, buy a new home, or just be more financially responsible.

Here are five small, simple financial steps you can take this year to lead to better personal financial success.

1. Arrange for autopay on as many bills as possible to ensure your bills are paid on time. 35 percent of your FICO score is based on whether or not your bills are paid on time. Also, when your bills are paid on time, you don’t accrue interest or late fees. Having your bills automatically paid also saves you time and decreases your stress.
2. Pay more than the monthly minimum on credit cards. Extra money you pay on your credit cards goes toward your principal balance. We recommend paying at least $20 more per month than the minimum to help significantly decrease the balance. If you have more than one credit card, start with the one that has the highest balance or highest interest rate first.
3. Plan a budget and stick to it. Each month, create and review your budget and throughout the month, revisit it to make sure you’re sticking to it. Break down your expenses so you know exactly where your money is going. Knowing how much you spend will help you spend less. Some financial experts recommend using cash rather than credit cards, especially for entertainment expenses, dining out, and other miscellaneous costs. That way, once the cash runs out, you know you have reached your monthly limit.
4. Save a reasonable amount each month by automatically drafting it into a savings account. Determine how much you can reasonably save each month without having to withdraw any of that money out of savings. Set up an automatic transfer for that amount to be deposited into your savings account every month around the same time. Then, don’t touch it.
5. Pull your credit report at least once each year. You can receive a free credit report at Annualcreditreport.com. This report won’t give you your FICO score (also known as a credit score), but it will help you review and evaluate your credit to ensure that there aren’t any mistakes and to help you better manage your credit. If you’d also like your FICO score, you can obtain that at myFICO.com for a fee. The average credit score is around 690. If your credit score is lower than that, you should work to improve it.