Women Can Find Empowerment Through Financial Health! Part 2

Improve Your Personal Financial Health

Last week, we talked about how it’s interesting that when discussion about women’s health arises – particularly during Women’s History Month, no less! – people seem to be more likely to default to PHYSICAL health; how caring for our physical and mental selves allow us to feel as close to optimal as possible. However, a more nuanced and honest discussion may also include areas of personal finance and financial health.

In fact, a joint study by BlogHer and Chase Slate in 2018 found 94 percent of respondents felt their well-being was directly linked to financial health. Fifty percent of women in the study said they experienced health issues because of financial stress. That said, 98 percent – that’s right, 98 percent – said they wanted to improve their financial health. They WANT to improve their financial situation, but what if they simply don’t know how, or don’t know where to start?

Here are Five Steps To Take You Down the Path to Improved Financial Health!

Learn about and understand credit scores

Regularly checking your credit score while getting back to financial health can be nerve-wracking. Knowing your credit, however, represents a good initial step to improving it. As credit specialist Tyler Gregory said, “If you don’t take care of your credit, your credit won’t take care of you.”

“You can survive with bad credit, but it’s not always easy and definitely not cheap,” says The Balance’s LaToya Irby. “Establishing a good credit score will help you save money and make your financial life much easier.”

Credit scores measure your creditworthiness by calculating the information within your credit report. It determines your qualification for loans, what kind of loans and how much you qualify for, and your interest rate. In the final analysis, your payment history will determine about 35% of your credit score.

A prime piece of advice in this area is that that missing credit card payments or paying less than the minimum requirement on the card can negatively affect your credit scores. Paying off the minimum balance doesn’t mean you should max out your cards; the amount of credit you spend each month also has a significant effect. A full third of credit scores are decided by the credit-to-debt ratio, or the amount you put on your card in comparison to your credit limit. A healthy credit-to-debt ratio falls roughly around 30 percent. If you have a $10,000 credit limit, you should not spend more than $300 a month.

Give yourself a regular credit report check-up

It’s no different than going to the doctor or dentist at regularly scheduled times throughout the year. Checking your credit report regularly is key to staying on top of your financial health goals.

A credit report lays out the history of all credit and loan accounts including on-time payments, duration accounts, and credit use. All of these factors influence your credit score, so it’s important to make sure the report is accurate. Also, it’s advisable to check for any incorrect information or fraudulent activities that can adversely affect your credit score.

Federal law allows three full credit reports each year – one from each of the three major credit reporting bureaus — Experian, Equifax, and TransUnion. Benefiting from any or all of these three bureau reports can help you take stock of your financial health goals.

Establish a rainy-day emergency fund

There are those unfortunate times in life that simply don’t go your way. Regularly setting aside money every month will come in handy when those not-so-fun times come around. That doesn’t necessarily mean you need to sacrifice hundreds of dollars at once every week. That emergency stash should cover three-to-six months of expenses. At this stage of your financial recovery, the focus should be more about costs rather than income. You should determine your key financial obligations including, for instance, medical insurance or a monthly car payment, and household bills. Once that final tally becomes clear, make sure to contribute to an emergency fund every week until your goal amount is reached. That feeling of financial security not only helps you accomplish your objective but may enable a sense of accomplishment during a potentially troubling time.

Be honest about your spending habits

Being honest about where your money is going is key to minimizing avoidable purchasing habits and redirecting those funds toward your savings or investment assets. As you review your account statements every month, look out for those sneaky transactions under $10 – that errant, overpriced latte at 3:00 in the afternoon, cab rides downtown, that convenient but oh-so-tasty Chinese takeout that one Wednesday night. Those are the kinds of purchases to consider when determining where to cut some spending while converting those funds to savings or investment accounts.

Set goals and hold yourself accountable

The first step when it comes to your finances is setting goals. Being able to see those goals through to success, however, is the real challenge. To create real incentive to successfully achieve your financial health goals means finding ways to hold yourself accountable. One method is to tell your goals to a friend, confidante, or relative. “People are far more likely to stick to savings plans when they announce them,” said TIAA president and CEO Thasunda Duckett. “Tell a trusted girlfriend about your plans, so you have someone to cheer you on.”

From understanding your credit score to setting goals and holding yourself accountable, outlining a plan is key to empowering yourself to build healthy credit.

As for Sharita, from last week’s article, you may ask? “The entire process was no walk in the park,” she said. “It took me several months to start to feel financially confident, but all the hard work was worth it. My children and I moved into our new home, and I even secured a government job.” Not only that, but Sharita actually left that government position to start her own company. “I would tell other women in a similar position to never lose hope. They have the power to change their financial trajectories and build beautiful lives for themselves and their children. Change happens when you shift your mindset and start to believe in yourself. Once you begin to shift your mindset and modify your money behaviors, this will create a positive relationship with your finances.”

(Partially reprinted from www.cuinsight.com and qcashfinancial.com)

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12 months 4.32%
18 months 4.32%
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