In an effort to increase financial literacy, the NFCC creates a culture of financial stability. And considering the recent economic headlines, many Americans have a renewed enthusiasm toward regaining control of their financial future.
The NFCC suggests that consumers review the following "Top 10" financial basics to see if their financial houses are in order:
- I open my bills the day they arrive. This may seem like common sense, but everyday people walk into one of our Agencies with grocery bags filled with unopened bills. Ignoring the problem won't change anything, but facing the facts and developing a plan will.
- I review my monthly creditor statement thoroughly. Consumers not only need to be aware of the amount they owe and payment due date, but should check their statement for unauthorized charges which could indicate ID theft, rate changes, credit limit changes, and any additional fees that may have been added on. Contact the issuer immediately if you observe anything out of the ordinary on your statement, or if the terms changed.
- I pay my bills on time. Late fees can be in the $40 range, and one late payment can ding your credit score by as much as 100 points. If you're a procrastinator, travel, or are just plain unorganized, set up automatic bill paying to make sure you're never late with a payment.
- I record each check I write, along with any ATM withdrawals. Overlimit and non-sufficient fund fees can be as high as credit card late fees. Even if your financial institution allows you to exceed your balance, you'll pay a hefty price for that courtesy. Record all transactions and know where you stand at all times.
- I do not max out my credit card limits. Utilizing all of your available credit will likely backfire on you. Creditors like to see people responsibly manage their credit by using only 30 percent or less of what's available. Maxing out your cards could indicate that you're in financial distress and move you over into the risk category in the creditor's eyes. That could equal higher rates and lower credit lines moving forward.
- I track my spending and know where my money goes.You relinquish control of your financial future unless you have a keen awareness of your spending habits. Many people feel that having a budget would restrict them, but in reality a spending plan frees you to use your hard earned money as you see fit. Track your spending for 30 days, organizing the results by category. Once you see your spending in black and white, it will put you in the financial driver's seat where you belong.
- I have at least one month's income earmarked for emergencies. Unanticipated expenses have been known to wreck the best of budgets. Without a rainy day fund, when the emergency arises, you have to either pay for it by charging, often adding to an already burdensome debt load, or grab cash from another area, thus neglecting that payment. Start by putting 10 percent of each paycheck into an emergency account. At the end of a year, you'll have a little more than one month's income stashed away, which will be a welcome safety net.
- I have three to six month's income saved in the event I lose my job. Job losses have affected almost every employment sector, thus no one is immune from the pink slip. Now is the time to prepare. Without a paycheck, cash is indeed king. Accumulating this much money can seem like a daunting task. However, no one ever regrets having significant savings to fall back on during hard times. Recognize that you're on a slippery slope if this element is not a part of your overall financial picture.
- I have an annual insurance check-up. No one should be over-insured or under-insured. The way to avoid this is to review your policies once each year with your insurance agent. Make sure that you understand exactly what is covered and what isn't. The last thing you need in an emergency is a big surprise. If you don't understand the lingo, ask for further explanation. Inquire about ways to save on your overall insurance costs without sacrificing coverage.
- I have a well-thought out plan for tomorrow, and am executing it. People have short-term and long-term goals, and we need to plan for each. An example of a short-term goal is a summer vacation. Long-terms goals are things such as a college education for your children and your retirement. Such financial realities cannot be ignored, nor will they take care of themselves.
Hopefully, you found that you're in good financial shape, answering yes to each of the above statements. However, if you need assistance putting some components of this financial plan in place, know that there is help available. Reach out to a trained and certified credit counselor by calling the NFCC or visiting www.nfcc.org.
For more tips about getting your financial house in order, visit Military.com's Finance channel.