Everything in life revolves around numbers, so it would make sense that you need to know your numbers.
You need to know your social security number, your phone number, your street address and the numbers to your driver’s license, even what number your combo meal is at your favorite fast-food restaurant.
If there weren’t numbers in sports, how would you know who won the Super Bowl? Can you imagine?
In finance, knowing your numbers is the first step towards putting together any sort of financial plan. There are four key numbers that you should be able to rattle off faster than your cell number.
Your Credit Score:
This is the single most important number that will define most of your financial future. With a good credit score, one that is north of 720, you get the best rates for buying a car, getting a 0% interest credit card, refinancing your student loans, buying a house and so on. You are the crème de la crème.
With a not-so-good credit score, anything below 700, you are considered more of a credit risk. There are lots of things that can drive your credit score down, including too high of a balance on your credit cards, lots of credit inquires and more, but the major reasons for a lower score are collection accounts, unpaid balances and late payments. Paying your bills on time is one party that you never want to be late for.
Every year you should make a date to get your credit report. You can get a free credit report from lots of places online including Annual Credit Report.
If you do a Google search for credit reports, you will see that many times you need to pay to get a report. There are two reasons you would want to do this:
1) You want to get monthly credit monitoring
2) You want to get a credit report with your credit scores on them
Wait, you mean I don’t get my credit score with a free report? That’s right!
If you want to get your score, I suggest spending $9.95 with Creditreport.com. If you don’t know what your score is, it is always a good idea to spend the money so you can know what those numbers are once and for all.
The numbers can and do change, so make sure you are checking them once a year. If anyone ever runs your credit and asks you if you want a copy of the report, your response should always be, “Yes, please.”
“How much money do you make?” “I don’t know I never open my paycheck stubs.”
That is a common conversation between a financial planner and their clients. If you don’t open the paycheck stub, or check your direct deposit online, how will you ever know if your deductions are correct, or if you have vacation time or how much exactly you have to budget for that month?
If your paychecks are one of the sad and lonely paychecks that never get opened, now is the time.
Open the last paycheck you’ve received and take a good look at it. All the numbers might not make sense, but at least you can figure out how much will be deposited into your bank account. That’s a good starting step.
Expenses are those little costs that eat away at your bank account every day. They include the big things like rent and car payments, and even those silent budget killers like your coffee fix and your parking fees.
[Tweet “Knowing what your expenses are is the #1 way to stay on budget each month”]…or at least in a healthy range of your budget.
Hey, it’s normal that things come up from nowhere every month that you have to spend money on, but that’s why it’s also important to get yourself some savings.
If you haven’t tracked your expenses, there is a common cure that is easy to apply. Print off last months statements from whatever accounts you pay most of your bills through. If you use an ATM card, then it would be the bank account tied to that card. If it is a credit card, then it would be those statements.