When you’re ready to take control of your money and really focus on creating financial security so you can achieve your goals, a little bit of knowledge can go a long way. You don’t need a college degree in finance to gain a better understanding of your money situation. If you’re wondering how to boost your financial IQ, simply follow these five steps to get yourself headed in the right direction.
1. Find Financial Resources You Enjoy
There is no shortage of personal finance content available at your fingertips on the web these days. The great news is that you can easily find engaging resources that help you get a better grasp on topics you’re not comfortable with. There are plenty of blogs (we happen to know of a good one), YouTube videos, books, and even podcasts. You can browse general personal finance content if you’re not sure where to start or look for more niche resources if you want to learn more about a specific topic.
Not sure how to boost your financial IQ in regards to retirement planning? A quick search can give you plenty of results. Then dedicate an hour or two to finding the blogs or podcasts that really resonate with you. This will give you an ongoing resource to check in on frequently for new information that matters to you.
2. Look at Your Bank Statements Daily
As you start building your bank of general financial knowledge, you also need to get a good grasp of what’s going on with your own money. The best way to start doing this is by looking at your bank account each and every day. It may sound like overkill, but this habit serves as a strong eye-opener to figure out how much you’re actually spending day in and day out.
If you’re surprised by how much is flowing out of your bank account, consider implementing a spending freeze. This is a great way to break major spending habits cold turkey. At the very least, try it for a week or see how long you can go without paying anything besides your regular bills.
3. Perform a Review of Debts vs. Assets
Another way to boost your financial IQ is to determine your net worth. Do this by reviewing your current debts versus your assets. When you actually write down these figures and compare them, you can figure out what your financial goals should actually be. Do you have a lot of high-interest credit card debt? You may consider focusing on paying that down. Are you debt-free but don’t have cash saved up for an emergency? Work on building a strong savings account next.
Then you can determine how much you have left to put toward discretionary goals like saving for a vacation or a down payment on a house.
4. Check Your Credit Score
You also need to know your credit score to get a true understanding of your financial picture. Check your credit score so you get an idea of what kind of borrower you’d be if you need to apply for a loan or credit card in the near future.
Be sure to take a look at your credit report as well to make sure all your financial information is reported accurately. You can quickly determine if there’s been any fraudulent activity under your name, such as a stolen credit card number or new accounts opened with your social security number.
5. Reassess Your Goals Regularly
Once you’ve gathered your collective financial information, it’s important to regularly evaluate all of these contributing factors to see if any of your plans need to be tweaked. Maybe your car insurance went up or your employer started offering a larger 401(k) match. Or perhaps you had a financial emergency and used some of your savings — you need to rebuild those funds for the next emergency that pops up.
Allowing yourself the flexibility to make changes in your finances is one of the biggest components of boosting your financial IQ. Learn that lesson and you’ll be on track to handle whatever life throws at you, whether it’s a good event or a challenging one. A little financial know-how can go a long way in being prepared.
Need Credit Help?
If you need to know how to improve your credit, get professional help. Having the right legal team behind you gives a huge boost to your financial IQ.
Schedule a free consultation with Ovation Credit today.