Financial Wellness

  • April 20, 2021
  • By: P.T. Phan

FINANCIAL WELLNESS

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Why Credit Matters Why Credit Matters

Our certified counselors talk with people about why credit matters, and why it’s a key building block to overall financial health and wellness.

Understanding your credit is easier than you may think. Building it properly has its benefits. It can help with everything from buying a car, house, to getting a job. Yes, even getting a job. That three-digit number can be an important building block in establishing a solid financial foundation.

Sometimes, the unexpected can happen; like a pandemic, a temporary loss of income, or an illness. Improving your credit may take time and patience, but it is worth it. If you have run into a bump in the road or experienced an unexpected hardship in your finances, there are programs to help.

Why is a good credit rating so important?

Juggling your credit is possible with planning and knowledge to get a better handle on your financial future. It is helpful to understand how it can impact you, your family, and your goals for the future.

Credit scores are increasingly important as the economy continues to recover, and more people apply for loans, rent, and buy homes. Banks and other lending institutions use your credit scores to decide who is a good risk based on their previous financial history.

Having a good credit score can save you money

What does this all mean? A good credit score is part of a path to provide opportunities you may not otherwise be able to access. Lower interest rates are offered to people with better credit scores – that means more money staying in your pocket. It’s also easier to get a loan or line of credit. Many companies require at least a fair credit rating before they will even consider doing business with you.

How is your credit score determined?

Your FICO Score (Fair Isaac Corporation) is a three-digit number based on the information in your credit reports. It helps lenders determine how likely you are to repay a loan. This, in turn, affects how much you can borrow, how many months you must repay, and how much it will cost (the interest rate).

When you apply for credit, lenders need a fast and consistent way to decide whether to loan you money. In most cases, they’ll look at your FICO Scores which track history with credit card debt.

There are several factors that help determine your credit score. Understanding them can get and keep you on a great path.

  • Payment History (35%) – Are you paying your bills on time? Keeping up with your payments and having a history of doing so, is a big factor in your credit score. If you’ve fallen behind, or need to get back on track; you can set up automatic payments, set reminders, maintain a monthly budget or savings plan.
  • Amounts You Owe and How You Use Available Credit (30%) – Know your credit limit and keep your balances low (30% of available credit or less).
    • If your balances are high, create a proactive plan to pay them down.
    • As you are working to pay down balances, stop using the card altogether. Also, instead of paying the minimum, increase your monthly payment.
  • Length of Credit History (15%) – How long you have had a line of credit open can help you.
    • Review your credit report to see how long it has been open.
    • Keep accounts active. If possible, keep older accounts open. The longer a credit line is open, the more it helps you in the long run. Subscription payments can be a great way to keep an account active, without interest charges.
  • Types of Credit You Use and Your/Credit Mix (10%) – It’s important to have a combination of revolving accounts and installment loans. This shows your ability to responsibly handle different types of loans like auto loans, personal loans, or student loans.
  • New credit / Having too many lines of credit (10%) – Opening an account is certainly ok. Opening five accounts at once…maybe not so much. When you apply for credit, remember:
    • Applications for new credit stay on your account for two years.
    • When you do apply, it can cause a slight dip in your credit score.
    • Remember it is important to handle any new accounts responsibly to avoid more significant impact to credit.
    • If you are taking on too much credit, it could signal you are having financial issues.

Why Credit Matters – Next Steps

Establishing good credit shows you are responsible, and you’re ready to help build a positive future for yourself.

If you’re not where you want to be in terms of your finances, start today by understanding where you are, your credit, and put a plan in place. Free help is available through GreenPath. You’ll benefit from financial assessments, housing counseling, credit report reviews, and debt management.

 

Request a Call with a Financial Expert

tracking your e penses What Influences your Money Habits?

We think a lot about what influences people’s money habits here at GreenPath Financial WellnessAnd so do our clients. 

When our financial counselors speak with clients about specific challenges they might be facing, it can be helpful to have a conversation about the factors that influence money habits and behaviors. 

From family experiences to other factors such as the media, a range of influences shape our views of the world – including the money habits we put into practice each day. 

Whether we have patterns of spending, saving, investing or even budgeting, these habits are usually shaped by our past experiences. 

As the webinar highlight notes, there are three key influences when it comes to money habits: 

Family

How we relate to finances is very much related to what we experienced in our families, and the money lessons people experience across the generations 

Perhaps our parents were not comfortable spending money and had a distrust when it comes to taking on debt.  Or maybe we witnessed a family life where there was a high tolerance for spending and taking on loans for purchases both big and small. Whether we were in families that were big spenders or big savers, or somewhere along the spectrum, many people can identify with the role their family’s played in their money habits. 

Media

Movies, television shows and social media often romanticize the appeal of beautiful homes, nice cars, new gadgets, and brand-name clothing and jewelry. The media plays a big role in emphasizing the desire to have the latest and greatest of everything – despite the realities of our financial situation.   

 While the entertainment industry is a big part of our media diets, our social media feeds serve up a never-ending stream of photos and updates showing off expensive vacations, cars, elaborate events and more. As a result, many of us are tempted to “keep up with Joneses” and by ramping up our spending.  This is a significant influence on our money habits. 

Culture

Attitudes and perceptions about how we handle our money are also influenced by the larger culture.  For those living in a culture of consumption, the “buy now, pay later” philosophy is everywhere.  For those in a culture that puts an emphasis on economic restraint, that philosophy and influence is likely quite different. 

While cultural influences affect how we view money, we also have the power to choose how we interpret cultural exceptions.  Many people turn the “conspicuous consumption” influence into a positive effect to encourage good money habits. They might see the cultural behaviors as life lessons on what not to do. 

Know Your Money Habits

Where do you stack up when it comes to money habits – especially when it comes to credit card debt? 

All told, knowing your money habits is a good step toward financial health and wellness.  If spending is getting out of hand, for instance, due to the pressures of keeping up with a friend’s social posts, it might be time to slow down and take a hard look at spending 

Take the next step – check out the educational resource  Redesign Your Money Habits. 

financial tools Financial Tools for Success

April is Financial Literacy Month –  a good time to consider the importance of financial literacy education, especially with the economic uncertainties caused by the ongoing pandemic.

Continuing our series of blogs sharing information as part of Financial Literacy Month, the focus today is on finding the right financial tools for success – whether the resources help us with budgeting, setting financial goals, or managing credit card debt, loans, or other debt.

Check out these financial tools to begin understanding options to figure out your finances.

Financial calculators: A healthy financial future begins with an understanding of a person’s current situation. Online financial calculators help people run the numbers and answer questions related to financing their home or comparing how a debt management plan can help manage credit card debt.

Financial wellness resources: Being able to make healthy financial choices is about having good information at your fingertips. Much of that education is available online, but it’s important to tap into trusted resources. As an example, as a national nonprofit, GreenPath makes available a library of resources including worksheets, guides, educational on-demand webinars about managing finances, online learning experiences to help set a simple spending plan or prioritize expenses, and other educational tools.

YOUR JOURNEY TO FINANCIAL WELLNESS BEGINS HERE.

Whatever your financial situation, take our 3-minute assessment and we’ll work with you to create personalized steps for moving forward.

TAKE THE ASSESSMENT

Financial counseling and debt management: Teaming with a trusted financial counseling agency gets the right information to help people make the best decisions about their future.

As a national nonprofit, GreenPath Financial Wellness provides free one on one financial advising with certified counselors. You’ll improve your financial literacy education with credit card debt counseling, debt management plans, student loan counseling, housing counseling, foreclosure mitigation, and debt management counseling

Based on a person’s full financial picture, people will understand how to pay down debt, steps to rebuild credit history, tips to create a savings strategy or other specific information to move forward.

Let’s Connect

Financial Literacy Month is a good time to connect with a caring financial counselor to conduct a free financial counseling session.

Which financial tools are right for you? If you are ready to manage, and eventually eliminate, your debt, let’s connect!

Talk with an Expert

Questions about managing money 3 Questions about Managing Money

Asking questions can be a great way to gain wisdom and insight.

Spend time with younger children who are full of questions about a range of topics – why is the sky blue? for instance – and that becomes clear.

When we think of our financial health and wellness, questions can help us find new solutions.

It is in that spirit that we offer three questions about your financial health.

What is it about the times we are living in that makes financial health so important?

This ongoing pandemic is certainly impacting all of us.

As a result of the economic fallout of the COVID crisis, which continues each month, people may be experiencing changes in income, perhaps a temporary reduction in hours or pay, or other uncertainties.

The temporary CARES Act relief options are also up in the air. Deferrals on student loan payments, temporary mortgage forbearance and other relief related to debt contributes to uncertainty.

Many people are looking to understand how to manage monthly payments when relief ends, as well as how to handle any increases in consumer credit card balances.

So the times we are living in, with all the uncertainty, make prioritizing monthly expenses important to get a solid footing on money management and financial health.

A useful resource to make sense of it all is GreenPath’s Aligning Priorities workbook.

YOUR JOURNEY TO FINANCIAL WELLNESS BEGINS HERE.

Whatever your financial situation, take our 3-minute assessment and we’ll work with you to create personalized steps for moving forward.

TAKE THE ASSESSMENT

What are the biggest opportunities people have regarding improving financial health and wellness?

All of us have goals when it comes to our money. For instance, recent college graduates, as well as other groups such as millennials, might be hitting key milestones in their lives: establishing careers; managing student loan debt; building credit history; perhaps considering starting a family; looking at a home purchase or thinking about other big investments. Retirees are likely looking to understand their budget on a fixed income.

Whether it’s setting a spending plan for monthly bills; understanding how to manage credit cards or other money matters related to people’s goals, taking steps toward financial health and wellness is important.

Some of the biggest opportunities can be found with some tried and true suggestions, such as making the best use of credit cards. Other steps worth exploring include:

  • Keeping receipts helps with keeping track of monthly activity.
  • Having a spending plan will help you reduce the chance of impulse buying. When you have a plan, there’s less chance you will overspend on items you don’t truly need.
  • Sometimes it is necessary to use credit cards to cover important expenses such as food, gasoline, and utilities. If that becomes a regular pattern, it is helpful to review your budget.

Make the most of your opportunities to improve financial health with these resources and tools.

What are specific actions people can take who are looking to better manage debt?

A secure financial future depends on building healthy habits, especially around credit and debt.

And when it comes to credit history and credit scores, you can take action by knowing your numbers.

To get smart about credit, it involves taking the time to pull reports that show your full credit history, and your current credit score

Having a healthy credit score means you get favorable interest rates on any loans you might be thinking of applying for – like a car loan or mortgage.

View an informative video for a refresher on what makes up a typical credit score.

We advise our clients to pull their credit report regularly to understand what is being reported, and if needed to check for errors.

Annualcreditreport.com now allows weekly updates of all three credit bureaus. If something’s inaccurate, talk to your creditors first. If needed, dispute with credit bureaus.

Another action you can take is accessing support from a national nonprofit like GreenPath. Our certified counselors help you begin a conversation about where you are today, and what you need to accomplish your goals.

We listen with respect, offer advice and information, and suggest products or services that could help you meet your needs.

GreenPath financial counseling services help anyone who wants to manage their finances, improve their financial health, figure out their situation, and make a personal plan to achieve financial goals:

Have Questions About Managing Money?

It’s been said that those who ask the best questions come up with successful ideas.

The questions offered above are just a start, suggested as a way to consider asking specific questions about your financial situation.

GreenPath is Here for You

At GreenPath Financial Wellness, we are working to make it easier for everyone to achieve financial health. We can help you gain a better understanding of your spending habits, and work with you to create a budget to achieve your dreams. Our financial coaches are kind and caring. We can help you understand your finances and make a plan to meet your goals. It’s free, confidential and no pressure!

 

Request a Call with a Financial Expert

Money Tips for Women Top Money Tips for Women of All Ages

March is Women’s History Month, a time to celebrate the vital roles and achievements of women in American culture and society.

It is also a time to celebrate you as a woman and continue – or begin – healthy financial habits that will create the life you desire.

In the last few years, it has been estimated that women lead 40% of U.S. households.  Whether you are single, a sole parent or the designated person in a partnership handling the monthly bills, many people feel stress about making sure they are checking all the right boxes, and not missing out on opportunities to increase their wealth.

As the esteemed writer/poet Maya Angelou once said, ”When you know better, you do better”. And in the spirit of building a better financial future, here are a few money tips for women to keep your household on track.

YOUR JOURNEY TO FINANCIAL WELLNESS BEGINS HERE.

Whatever your financial situation, take our 3-minute assessment and we’ll work with you to create personalized steps for moving forward.

Put Your Goals in Writing

People with written goals are more likely to achieve them. It entails envisioning what you see for yourself and then using that goal as the momentum to make it a reality. Financial goals can be both short-term and long-term.  Short-term you may plan to pay off debt, whereas a long-term goal may be to save up enough money to buy a house. Either way, make sure to revisit your goals at least once every 3-4 months and make adjustments when needed.

Create a Budget

Many people see budgeting as a punishment plan.  And it can seem that way if you are trying to correct years of financial problems in one day.  But really a budget is just a financial blueprint that shows your income and what expenses you have on a monthly basis. You now can make informed decisions on where your money goes.

Emergency Fund and Retirement Fund are not one and the same

There is a saying that encourages people to save for a “rainy day, because it going to rain.”  But many people put that into one bucket called Savings, and due to tight financial circumstances don’t feel they have anything significant to put into their savings.  An Emergency Fund is designed to prepare you for unexpected job loss or large expenses.  From your budget, you can determine a set amount to put into a savings account from each paycheck, which will give you up to 4-6 months of living expenses. Some people have their employer directly deposit part of their paycheck into a savings account.

Your Retirement Fund is a longer-term process.  In fact, the younger you start saving or investing, the less you will have to worry about growing the fund later in life. If your employer offers a 401K plan, you can take advantage of the pre-tax savings.  If there is not a 401K option, or you are self-employed, you can invest in an Individual Retirement Account (IRA).

Know the Good from the Bad

Many people talk about the difference between good debt vs. bad debt.  But really debt is borrowing money you haven’t earned yet. If there were a way to define it, it would be a low-interest loan to acquire an asset or improvement – like a house, car, or student loan.  Beware of high-interest credit cards that can become difficult to pay back if your financial circumstances change unexpectedly.

Be the Financial Role Model for Your Family

It is never too early to instill sound money management habits.  Many times we keep our children out of the financial management decisions because we want to protect them from any anxiety.  But actually, it is important for them to know that things cost money, and there is a way to plan for what you want in life, instead of just buying on impulse.

You can start by reviewing a simple budget, allowing them to plan out their spending, even put measures in place for them to earn their allowance.  For older children you can set up an account that has a monthly amount, where they can draw money for gas and incidentals; and when it’s gone, it’s gone.

Testimonial of a Milestone Achievement

Mona Alvarado used GreenPath credit counseling to help manage her goal of paying down mounting credit card debt.  At first, she hesitated to make the initial call, because she assumed it would be a complicated process, and it would seem like she had to get help to pay off her debt.  Fortunately, Mona set her fears aside and took the necessary first step in getting control of her debt.

The call was not what she expected. She thought the credit counselor would be like a “financial fairy” and take over her debt payment process.   Instead, she was provided with options that allowed her to become informed and control her own debt payment process.

Today Mona has successfully paid off all her credit cards, which resulted in an improvement in her overall credit score.  Most importantly, her four children now have a great role model for financial management.

Mona

Money Tips for Women – Next Steps

Putting into motion these money tips for women takes planning.

GreenPath can help you gain a better understanding of your financial picture and what steps to take to gain financial health. It’s free, confidential, and no pressure.

Ready to talk to someone? Request a free counseling session.

teaching children how to budget Teaching Children How To Budget

Teaching children how to budget at a young age, will be helpful for them later in life. When your child gets money as an allowance or as a gift, you can help get them started with simple budgeting concepts.

Start With Goals, Wants and Needs

Talk with your child about money and how to use it wisely. Talk about their goals for their money.  What do they want? What do they need? There may be short-term goals they can be purchased right away. They may have long-term goals that will require them to save over time. It is helpful for children to have a reminder of why they are saving and why they should not spend all of their money now.

Save, Share and Spend Method

“Save, Share and Spend” is a method for children where they set aside money toward each of these three things.

Save

When your child earns money, they should first set aside a portion for savings. The recommendation is to save at least 10% of earnings. This percentage can be increased for children because they have fewer expenses. Savings can be accumulated in many ways. Some use a jar, piggybank or even a joint bank account to gain interest. The savings account should be kept for emergencies (new bike tire) as well as longer-term goals (first car).

Share

Teaching children about charity at a young age is also useful. Allow them to research and contribute to a charity of their choice. Sharing is typically around 10%. Discuss options with your child to determine which cause they may enjoy helping. Also consider having them volunteer with that organization to see what they are actually helping. For example, it can be very rewarding for children to use money to purchase toys for a local outreach center. Then they can help pass out those items out to needy families at Christmas.

Spend

The remainder of their earnings can go toward spending. The spending category is available so your child can make purchases they choose, but remind them that additional savings will help them reach their long-term goals faster.

Start Small, and Set An Example

It is helpful for your children to see how you budget, but start small. For example, allow them to help you plan the weekly grocery shopping. Start by planning a list from sale flyers and coupons, and then stick to that list at the store. This can turn into a saving game for them.  Remember, children will learn from your example.  So telling them about budgeting is important, but it’s much more impactful if they see you following a budget yourself.

Reasons To Budget 5 Reasons to Make a Budget

Making a budget and following it are two powerful financial habits. It’s not always easy, or fun at first. But it is one of the best steps you can take to successfully manage your finances.  There are many reasons to budget and in the long run, it feels really good to see yourself accomplishing a goal.

Reasons to Budget (There Are More Pros than Cons!)

#1 – A budget helps you gain control of your finances

Think of a budget as a financial roadmap. It will guide you to your destination. It will also reduce arguments and improve relationships because you and your family will know where you are going financially, providing a smoother ride along the way.

#2 – Budgeting helps you achieve goals

Whether it is putting money aside for emergencies, a vacation or a college education, a budget helps you devote resources to those things that you determine are most important. Having a plan also promotes well-being and reduces stress.

YOUR JOURNEY TO FINANCIAL WELLNESS BEGINS HERE.

Whatever your financial situation, take our 3-minute assessment and we’ll work with you to create personalized steps for moving forward.

TAKE THE ASSESSMENT

#3 – A good budget keeps you honest

Documenting purchases allows you to figure out where your money is going.  It allows you to stay accountable to your goals. By keeping a budget, each dollar you spend is accounted for. That’s a powerful incentive to stay true to your good intentions.

#4 – Budgeting helps improve habits

If you spend more than you earn, you will drain your savings. And if it continues, you will take on debt.  By measuring how you spend your money, you will know for sure whether you’re headed for trouble, and you can take the steps necessary to improve your habits.

#5 – Budgeting helps you avoid debt and improve credit

By truly understanding how much it costs to be you, you can make adjustments to stop living from paycheck to paycheck. You may be able to identify ways to get out of debt and stay out of debt. By paying your bills on time and not taking on too much debt, you will take the most important step toward building good credit.

GreenPath is Here for You

At GreenPath Financial Wellness, we are working to make it easier for everyone to achieve financial health. We can help you gain a better understanding of your spending habits, and work with you to create a budget to achieve your dreams. Our financial coaches are kind and caring. We can help you understand your finances and make a plan to meet your goals. It’s free, confidential and no pressure!

Request a Call with a Financial Expert