This week's Millennial Money podcast is all about answering the toughest listener questions. We tackle:
1. Where do I begin?
You've got to start with the basics – knowing your credit score, knowing your income, but more importantly, knowing your expenses down to the penny. Expenses are the danger zone for just about everyone, so print off your recent bank statement and start knowing your numbers.
2. What is a credit score and report?
A credit score is like your DNA. It is a three-digit number that is composed of many factors that is unique to you. It is based on your social security number, and tells credit companies how much of a risk you are in terms of credit. If you have a low credit score, credit companies won't want to lend you as much money. Aim for a score of 720+ for the best credit offers. You will also want to check your credit report once a year. The good news is that it is FREE to do so, and this way you can make sure that your frequent trips to Target haven't cost you a good credit score – remember all the credit hacking that has gone on…you don't want to be a victim.
3. I'm 22 and I'm not interested in saving for retirement. Why do I need to?
I get it. Retirement is a loooonnnggg ways off, but trust me, you are going to need a lot of money to retire. How do you accumulate it? It's easy when you start saving a little every month. Even $25 is enough to start your bank account balance growing. Savings works together with a concept called “compounding”. This means that your money starts stacking on top of itself with interest, like a snowball rolling down a hill. Here's a fact, it's possible that you may need millions of dollars saved to live comfortably in retirement, and that's why you need to start now.
4. I've maxed out my credit card, do I need to pay it off?
Credit works like this: you need credit to get credit. The more available credit you have, (aka the amount you haven't used), versus what you have used, the better your credit score. The better your credit score, the more credit you can get. It's like a giant game of chess, only you want to win this one. Be smart with your cards and pay them off each month. Maxed out on anything usually isn't a good idea – remember the last time you ate too much pizza!
5. Why do I need a credit card and which one is right?
Again, you need credit to get credit. It's that simple. The right one, well I believe that if you aren't getting anything from your credit card, it isn't the right one. I'm talking POINTS and CASH BACK here. Find a card that offers you something for the money you are spending. There are tons of resources to find the right cards, so there are no excuses. Do some research and make smart choices.
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