Every so often, it’s important to take stock of your financial health and focus on a plan to achieve your goals. Here are some tips to help you get started:
Check your credit reports
To start building your plan, it’s important to know where you stand. Checking your credit reports regularly is a good first step, as your credit health is an important part of your overall financial wellness. You can get a free credit report from each of the three nationwide credit reporting agencies every year at annualcreditreport.com. You may also want to consider signing up for a credit monitoring service like TransUnion Credit Monitoring. Many credit monitoring services alert you to any report changes as they happen, so they can be a smart addition to your plan to build and maintain your credit health.
Once you’ve reviewed your credit report, along with your other financial information, it can seem overwhelming to know what to do next. But you don’t need to make big changes to have a big impact over time. Two common starting points are paying down debt and building a savings account.
Pay down debt
If you have credit card debt, you’re far from alone. The average credit card balance is $5,668, according to a recent TransUnion Industry Insights Report. Paying down debt can help lift what feels like a huge financial burden and reduce stress around major life decisions. Take control by creating an actionable plan and good, consistent habits, like making all payments on time with at least the minimum payment. After budgeting for all minimum payments, focus on an account to pay a little more on if you can. Some people like to focus on the account with the highest interest rate, while others choose the one with the lowest balance. Do what makes you comfortable and will motivate you to stick with your plan. Before making any investment or financial decisions, you should consult a qualified attorney or financial advisor.
An added benefit to paying down debt is that it can help your credit health. As you pay off credit card balances, it will decrease your credit utilization, which is a big factor in your credit scores. Combine this with your consistent, on-time monthly payments, and you’ll have built a strong foundation for healthier credit. For more tips on building your credit health, follow TransUnion on Instagram.
Build your savings account
As you make progress in paying off debts, consider creating a savings goal. Schedule consistent automatic transfers to your savings account if you can, even if it’s a small amount at first. It may not seem like much, but simply having a plan you’re taking action on will help you feel more confident about your financial future. Over time, your balance will grow, and you’ll enjoy more freedom and flexibility to handle life’s milestones.
Everyone is at a different place on their financial journey. What’s most important is to make a thoughtful, realistic plan and practice your new habits consistently. Hiccups may happen, but sticking with your plan will help you reach your credit and financial goals.