Saving Money and Establishing Credit
We basically spend our lives either working or spending our money, but not all of us save the money we earn. People need to learn to save money because one day it could save them. For instance, setting up an automatic transfer to a savings account will be helpful to save for future purchase like a car. You could also start an emergency savings fund just in case you lose your job and need to pay rent, or for the unexpected in life. Establishing credit will later be beneficial when you need to get a loan for a mortgage or something that is going to be very expensive.
Many people have a hard time trying to save money, I should know because I’m one of those people. By setting up an automatic transfer to savings will help you by not giving you the option to spend your money or save, it automatically saves it for you to resist temptation. This becomes beneficial when you want to buy something like a car because you save enough for the whole car itself or like a down payment on a new car. By saving money automatically it helps you regulate how much you can spend on needs and wants. It’s in a lot of people’s best interest to think about using an automatic transfer to savings because it only benefits you in the near or distant future.
Have you or someone close to you lost their job in the past and struggled to pay bills or other necessary expenses? That’s when an emergency fund that you or that someone else should have set up, would have been very useful. Saving for an emergency will almost always be beneficial or necessary because you never know what could happen. Some people do not prepare themselves for those things that may come up when they really should be. By saving a portion of your money every paycheck, or even once a month could potentially save you in the future. Let’s start to think a little more practical and get yourself an emergency fund that could just save you.
I know in the future that I would like to buy my own house. Obviously, I will have to get a loan from the bank in order to purchase said house. There is no bank that would lend me money if they don’t know that I’d pay it back. Would you lend me a large amount of money if you didn’t know that I’d pay you back? No I wouldn’t think so. That is when establishing credit will come into the mix. An example of how you could start is by getting a credit card with a purchase limit from your bank. If you purchase something with that card you will need to pay it off in time. The longer it takes you to pay it off, or, if you’re not making any payments, it will show the bank that they cannot trust you in paying things back. On the other hand, by showing them that you can pay it back quickly they’ll even raise the limit on your card. By doing things like that you will raise your credibility of paying things off and your credit score will be high. Give the bank no reason why they shouldn’t give you a loan.
Consider incorporating these three things: saving money, starting an emergency fund, and establishing credit in your life. By saving money, it could just save you. When you think practical, life will treat you well.