Who wants to think about mortgages, debt-to-income ratios, or retirement savings in your twenties? That is all stuff that can wait for later, right? Unfortunately, your financial freedom can never wait. You want to monitor it as early as possible to give yourself the best future you can.
Before you can become financially responsible, you need to understand how you could harm yourself with debt. Debt can be accrued by making large purchases such as a house or car as well as getting married.
Keep reading for six of the top tips on the financial tips you should know before hitting age thirty.
1. Choose a Fixed Rate Car Loan
When applying for a car loan, many financiers offer a choice of fixed or variable rate loans. A variable loan rate can look very attractive and back when the rates were adjusted in keeping with the Reserve Bank of Australia (RBA), it wasn’t a bad option, but this simply isn’t the case anymore. Lenders can adjust rates at their own discretion, they can pass on rate cuts and increase the interest you are paying completely independently of the RBA.
With a fixed rate car loan, you know, for certain, what your interest payments will be for the full term of your loan, giving you more control over how you manage your personal budget. Trust Latitude Finance for car loans, speak with their expert advisors and get a fixed rate car loan that works for you and your budget. This will allow you to make your payments comfortably each month, without any surprises.
2. Be Knowledgeable About Interest
Do you know what the interest rate of your credit cards is? Do you know how much interest you are paying on your car loan? It is imperative that you know how much money you are paying to interest every month. It is also critical to know how much interest you are receiving on any investments or savings accounts as well. If your interest rate is too high, you can check into refinancing your loans to get a smaller interest rate, which will save you thousands in the end.
3. Start an Emergency Savings Fund
This suggestion is probably the most important tip out there.
Sometimes life is not fair, and things happen that are out of your control. If you do not have one already, you need to set up an emergency savings fund of a minimum of $1000 balance. This is not to be used for anything but emergencies. If you find yourself in the emergency room, if your car breaks down, or if you lose your job, you need to have a cushion, so you do not go into debt. Make sure to start your emergency savings fund today.
4. Control Wedding Spending
Another excellent tip when learning about all things financial is to have an inexpensive wedding. We all dream of the perfect wedding day with flowers galore, an over-the-top wedding cake, and exquisite food.
Unfortunately, those things all cost money; most likely money you do not have. When planning and paying for your wedding, do not choose the most expensive options and do not pay with a credit card. That is a debt you do not want to start out with in your new life with your partner.
5. Check your Credit Score
Another important tip when looking at buying a new car, house, or boat is to check your credit score. You want to check your credit occasionally anyway to make sure there has not been any unauthorized access to your credit. However, as you think about a new, major purchase, check your credit score online and see where you are sitting, so you know how much of an advantage you have when making the best deal for yourself.
6. Don’t Ignore Your Debt
Most people in their twenties in Australia just want to have fun, which is great. However, fun comes at a cost, and usually, that expense goes on a credit card, which needs to be repaid. Credit card debt can quickly get out of hand as the interest keeps growing and growing. You feel that you never pay it down and it appears inescapable.
There is promise though; perform a balance transfer to a credit card with a much lower interest rate and pay more than the minimum monthly. If you complete these two suggestions, your credit card debt will be gone in a flash!
Why it is Critical to be Financially Prepared in Life
Whether you decide to buy a home, get married, start a family, or make any major purchases in your life, you need to be prepared for the risk those choices carry. You need to become knowledgeable on your expenses, what interest rate you are being charged, and what your credit score is. These small inquires will save you much heartache in the future, as you will be aware of the money games that some financial institutions can play.
Being financially prepared in life will make life much easier for you and your family. By understanding mortgages, debt-to-income ratios, and retirement savings, you will have money in the bank and a great outlook on your future financial endeavors!