There are few things more personal than, well, personal finances. Whether it's buying a home, planning for retirement or just staying ready for rainy days, financial literacy can help you take charge of your own financial journey. This guide is here to help you understand your personal finances, like budgeting your money and building your credit.
What is personal finance?
Personal finance boils down to key financial skills that keep you financially stable. This means things like budgeting, expense tracking, saving for retirement — financial hygiene that keeps you safe and secure.
Personal finance basics have stayed relatively the same since the coin was first minted. It’s everything you’ve heard before, put together. Indeed, much of financial literacy is common sense and using tools to help keep things simple. Let’s learn about the key fundamentals of personal finance and tools that may help.
A good budget prioritizes every penny. It shows how much you can spend and where, knows how much comes in and goes out, and prepares you for emergencies, saving and investment.
There are many methods and tools you can use to budget your money. The important thing is to stick to it and track your progress. If your budget covers expenses and keeps you on track for your savings and investment goals, that implies you’re on the right track. Thankfully, technology can help make budgeting easier. The Chase Mobile® app comes with a Budget tool that connects right to your money, making it easy to always know where you stand.
Pay bills on time
If budgeting is knowing where money goes, bill-paying is getting it there on time. Late payments may affect your credit score or jeopardize your account status. Timely bill payment can save money by preventing late fees and improving your credit score — which may lead to more favorable lending terms.
Tools like a mobile wallet or an online bill payment tool can help reduce the hassle of paying bills and lower your chances of missing a payment. Chase customers can set up recurring payments inside the Chase Mobile® app.
Your credit score is calculated using several factors, among them your payment history, how much you owe, the age of your credit history and the types of credit you have. This score is a measure of your creditworthiness, or how reliable of a borrower lenders may see you as. A higher credit score signals you repay loans in a timely and reliable manner — which may net you more favorable lending terms in return.
Missing payments, applying for multiple lines of credit at once and regularly hitting your credit limit can lower your credit score. Raising your credit score requires patience and making a habit out of good financial practices — like timely bill payment, may net you more favorable lending terms. Chase customers can check their credit health using the in-built Chase Credit Journey® tool.
Reading the fine print is important when it comes to your spending too. Knowing where your money goes on a granular level may highlight ways to save money. Maybe you’re still paying for a recurring subscription you don't use anymore or you forgot to add commute costs to your budget; it all adds up. Regularly keeping tabs with the Budget tool may help prevent overspending before it happens.
There are countless strategies to track your expenses. Some people prefer pencil and paper; others might use an ‘envelope system’ that allocates spending by time and category. Many today opt to go digital. Inside the Chase Mobile® app, for example, customers view personalized spending reports.
They say a penny saved is more than a penny earned. An emergency fund of three to six months of living expenses may help keep you prepared for when the unexpected happens. Setting up a nest egg can open doors to investment opportunities you may not have considered.
Personal finances require patience. Remembering financial basics like good budgeting, timely bill payment and expense tracking can keep you healthy while building savings and good credit. Taking advantage of the many tools available can simplify financial hygiene even further, so that many of these good habits become second nature.