Happy Women’s Day 2021! The theme for this year’s women’s day is #choosetochallenge, so our team is choosing to challenge your financial mindset and raising empowerment. In addition to growing our mindset, knowing to unlearn unhealthy habits is also vital to empower ourselves and take the reins on our finances. This week on our Live for Women’s Day 2021, we discussed how to challenge your mindset around money.
Are you taking your paycheck for granted?
Although you might feel safe with your paycheck, you might be letting savings and investment opportunities slip through your fingers if your mindset is set on looking at your current spending and income instead of future opportunities. One simple tool to help you understand your financial situation is to create and work with a budget. With a budget, you can identify where your money is going and make a spending plan to tailor your situation to your financial goals. If you want to learn more about how to make a budget and which apps are the best for you, check out our previous articles.
Know the 3 C’s of Cash Flow:
Whether you are aware or not, we all have a relationship with money. Is money your friend or foe? In order to financially empower yourself, you need to understand how you approach money and convert it to a positive relationship. If you don’t know how to get started, here are our 3 C’s of cash flow:
- Capitalize on cash: Have you heard of the term lazy money? Lazy money is the money that is resting on the side as you are working hard to save more for the future. A common saving account has less than 1% interest, so the money you are saving on the side is ‘resting’ and not earning you significant interest. However, working with an expert financial planner can help you build your wealth by significantly increasing your net interest rate through investments and making your money work harder than you. If you want to find a savings account with higher interest rates to keep your emergency funds, we recommend you check ratehub.com to compare savings account across financial institutions.
- Cashflow check-in: Once you create your spending and saving plan, it’s time to frequently check in on your expenses to ensure you are on track and working towards your goals. If you spend more on wants, checking in frequently can allow you to make adjustments on other items or in the following periods to compensate for your higher current expenses.
- Credit checkup: Banks require a minimum credit score of 650 to be considered to borrow loans. If you want to get a mortgage or line of credit, make sure you know your credit score to set realistic financial goals for your future. If you don’t know which website to use to check your credit score, we recommend Borrowwell which allows you to check your credit score for free.
Why is credit so important?
Credit gives you access to finances that can allow you to make investments and purchases such as buying a vehicle or home. If you want to be able to access these resources to reach your financial goals, you need a credit score of above 650. The higher your credit score, the less interest you might end up paying which can fasten the time that you pay off your credit entirely.
The rule of 72: A rule of thumb:
The rule of 72 allows you to calculate how long it will take for your investments or debts to double based on the interest you have. If you divide 72 by the annual interest rate you are paying, you can find out how many years it will take for the interest to double if you continue to make minimum payments. For example, if your credit has an interest rate of 20%, it will take you 72/20= 3.6 years to double your total credit debt.
Beware of bad debt:
Bad debt is investing in investments that go down in value, including car loans. Although buying cars or electronics can make us happy short term, they lose their value as they are used and lower our returns in the long run. We recommend you to be mindful about making financial decisions that aren’t overruled by your wants.
She who knows earns it, she who doesn’t pay it:
By being mindful of your finances through making a budget, knowing the 3 C’s or cash flow, understanding debt and credit and avoiding bad debt, you can financially empower yourself and work towards the financial future of your dreams.
Would you rather earn 20% on investment or pay 20% on a credit card? Being mindful of our tips can move you from paying that 20% interest to earning 20% interest. If you want to take action today and get started on your financial journey, book your complimentary 30-minute session with our team and get our expertized guidance!
Once again, Happy Women’s Day 2021!
Happy Women’s Day 2021! Check the full live chat here. You can find our live chats and more of the latest financial news on our News Blog. Stay tuned to learn more tips on a new topic each week on our Instagram Live at 5 on Instagram! Aside from our live chats, we post daily financial updates on social media! Follow us on Linkedin, Twitter and Facebook and Instagram.