Do you really need a credit card?

Credit cards are excellent financial tools when used right. Unfortunately, most consumers see it as free money. When they use it, they spend it without qualms even knowing the high interest rate and possibility of drowning themselves in debt.

With so many people stuck in credit card debt, you can’t really blame financial advisors who shun credit cards. But is it really wise to simply turn your back on them like some others do?

To answer the question, we have to talk about credit score. In today’s financial time, credit score plays a major role in most, if not all, aspects of your finances. If you want a mortgage loan, for example, have a good credit history is a requirement. The same is true for other personal loans and even applications such as a mobile phone contract. A good credit score, in other words, is critical in today’s day and age whether you like it or not.

One way to build a good credit score is to build a credit history. If you’re fresh out of college with no credit history, applying for a credit card is one way to do it. Credit cards, therefore, are useful in this respect. The trick is to make sure that you use your cards responsibly and pay them in full each month. Doing so will reflect on your credit files ensuring that you’ll get a good credit score in the end.

Rather than shun credit cards because of its high interest rates, it’s best to pick one you can use responsibly. When using the card for purchases, keep your eye on the goal, which is to build a good credit history that will help in several ways later on. Meaning keep the charges to the bare minimum, ideally below 30% of your credit card balance.


4 Ways to Ensure You Stick with Your Budget

When it comes to personal finance, you’ve probably heard the advice a dozen times. Master the art of budgeting and you’re on the right track. There’s just one thing most people often miss. Yes, making a budget seems simple and easy but it’s the execution most people fail at.
To help you avoid the same financial pitfall, below are tips and tricks to guide you when creating a budget you can stick with.

Keep it real

If you want your budget to work, you need to keep it real. In other words, be as realistic as you can be. Otherwise, you’re only setting up yourself for failure.

Start by grabbing a notebook and pen. Record the amount of money that’s coming in per month and all your expected expenses. Deduct your savings and work with what’s left. The goal is to live within your means by budgeting what’s left after savings to cover for all your expenses.

If the money isn’t enough, you’ll need to make sacrifices by cutting some on the luxury category and focusing on what’s necessary. If the money is still isn’t enough then you might want to find another job or a part time gig to add to your total monthly income.

Don’t be too hard on yourself

The goal is to live within your means but don’t be too hard on yourself. Yes, you should keep your finances in sync with what you’re bringing in financially but you should also leave room for small failures.

If you were not able to stay within budget this month, don’t beat yourself up. Try again next month. If it seems that staying within budget is proving to be more difficult than expected, give yourself some breathing room. Better yet, enlist the help of a financial advisor to help you during the first few months of mastering the art of making a budget.

Make a list of all your spending

In order to know which area you’re overspending and which area needs extra attention, you need to make a list of all your expenses. Every purchase you made this month should be duly and diligently recorded on your expense notebook.

From food to rent, gas, utility bills and other expenses, every penny spend should be on record. Yes, doing so may sound like its too much work but the effort will pay off eventually. You don’t have to do this forever anyway. As soon as you get the hang of things and you can stay within budget without glitch, you’re free to forego this part of making a budget.

Prepare for unexpected expenses

One of the reasons why most budgeters fail is because they don’t prepare for unexpected expenses. In order to make your budget work, you need to include a category dedicated to unexpected expenses. They don’t happen all the time but it’s best to have all bases covered if you want to stay in line.

Set aside a portion of your budget for unexpected expenses each month. In fact, it’d be better and highly recommended if you open an account solely for this purpose. You can then call that your emergency fund.

Reward yourself

When you’ve done due diligence and stuck to your budget like any good consumer, a reward is in order. This is especially important if you’ve had a tight budget and made it work. Treat yourself but without going too far. Maybe you can go out and enjoy a good night with friends. Or you can finally buy that new dress you’ve been eyeing for weeks. Or better yet, take a vacation. The type of rewards is up to you, just make sure of course it stays within budget.