Many parents this time of year are running through a whirlwind of emotions as their sons and daughters graduate and move on to college or onto the workforce out on their own. It is easy to worry if you have prepared them fully for the next phase of their life. Now while we can’t impart of all the knowledge needed in life we can give some helpful financial and credit tips they may find helpful.
Credit Is More Than Just For Shopping
We all know that credit is used for making purchases like houses and cars and getting credit cards that you can use in stores but it is also very important in many other aspects of life. Everything of from employment, to insurance rates, to getting an apartment can be affected by your credit history. Having a low credit score can not only affect what you can buy but also your entire way of life.
Credit Cards Are Tempting and Necessary
We like to call credit cards a necessary evil. If used wrongly they can build up your debt at rocket speed which can lead to payments that you can’t afford. And when you can’t afford you payments it can lead to lawsuits which can lead to garnishments and judgement. If used correctly, however, they can be the quickest way to build up the credit score and many come with great rewards such as cash back or airline miles. The best people with credit cards use them often and pay them off at the end of every month.
All Credit Cards Are Not The Same
When picking out a credit you should check the APR, the annual, the rewards, and other small print that might come with it. One type of credit card we tell our clients to avoid are store credit cards. For one you can only use these at one place and two while they may come with a discount on purchases their interest rate will generally greatly exceed any discount. This means if you are unable to pay off your card every month then you will end up paying even more for your purchases. This is exactly what they are banking on and it works very well for them.
Always Keep A Savings
This one doesn’t necessarily have to do with credit but is the backbone to any financial plan. We like to recommend building a savings of at least months worth of all your bills. This will give you some buffer if you lose your job or have an unfortunate medical issue. The last thing you will want is for your bills to start piling up and send you tumbling down a debt spiral. Also, it if will ease your stress levels and allow for a better night’s sleep.
While there are many other lessons to be learned these are some basics we felt needed to get out of the way. If you look further through our blog and credit articles you will find a wealth of information on everything from bankruptcy, to mortgages, to student loans, and even repossessions.