5 tips to improve financial stability and security

By Pavithra R

Working toward financial stability can be a daunting task, but developing healthy spending habits and practicing smart saving can make it easier to plan for the future and take control of finances. Credit One Bank, one of the largest and fastest-growing credit card issuers in the U.S. has outlined 5 tips to improve financial stability and security. These are:

Create a spending plan and budget

By building a budget and analysing spending habits, you can see how much money you have coming in and where or on what you’re spending it. This is considered the first step toward meeting short- and long-term financial goals.

Start by adding up your household income, including paychecks and other income, such as investments or rental property, then figure out monthly expenses starting with recurring bills like rent or mortgage, insurance, car payments, utilities, and subscriptions. Also, account for variable expenses like groceries, gas and entertainment. Once the income and expenses are calculated, look for places where you can cut back to help meet your financial goals. 

Earn rewards on everyday purchases

Stretch your budget further by taking advantage of rewards offered by banks or credit card companies. “Make sure your rewards are working for you – and not just as a gimmicky signup bonus. Find a credit card that continues to give you more for your everyday spending habits,” said David Herpers, head of product at Credit One Bank.

Compare interest rates when opening a savings account

When selecting a savings account, look for the highest yield but also keep in mind the minimum balance requirement, any introductory rates that may expire after a set period and the ease with which you are able to access the money and account information. Often, digital banks offer higher rates than traditional brick-and-mortar branches due to their lower overhead costs. Ensure any bank considered is a member of the Federal Deposit Insurance Corporation (FDIC), to ensure fair rate and protection of money.

Build an emergency fund

Emergency funds create a financial buffer that can keep you afloat in times of need without having to rely on high interest loans or maxing out a line of credit. These funds can be used to pay for unexpected expenses such as medical bills, job loss, car repairs or home appliance repair or replacement.

To build an emergency fund, set a monthly savings goal and set up a way for the funds to be automatically transferred to the account to make the task less daunting. Check the account periodically and adjust if necessary or if budget allows. A good rule of thumb is to set aside 3-6 months of living expenses.

Keep track of your credit

Credit score provides lenders and other parties an idea of your financial history and ability to pay. Having a good credit score typically offers better interest rates and makes it easier to get loan approval, rent an apartment, take out a mortgage or finance large purchases.

Many sites offer free credit reports and tools that allows to stay up-to-date and track score over time. Be sure to check reviews and verify the site’s legitimacy before entering personal information. Additionally, many credit card companies provide free access to online credit reports regularly to give customers an easier way to stay on top of their finances.

Also, read Lending Systems and Suppliers Report 2021