Its no secret that April is Financial Literacy Month. Becoming financially literate begins with basic skills and sets the course for the financial decisions you will make at every stage throughout your life.Smart financial decisions open the door to new financial opportunities.
It starts with your credit score. Before you are offered a credit card, a home or auto loan and sometimes even a cellphone, your credit score is typically checked. Keeping your credit score as high as possible will ensure the best results in your credit history. Promptly pay your bills and apply for credit only when necessary. Bills paid late or delinquent accounts will negatively impact your score.
Checking your credit report once a year will help ensure its error-free. If you find mistakes on your credit report, you can contact the credit reporting agency to make corrections. If you become a victim of identity theft, take action by contacting your financial service providers and credit bureaus.
Design and follow a spending plan. This might seem like a no-brainer, but when the Wall Street Journal last year called the Class of 2014, the most indebted college students ever, the critical importance of budgeting really hits home. Sticking to a budget allows you to effectively manage your debt-to-income ratio. Dont forget to consider infrequent expenses, such as annual insurance premiums and gift purchases in creating your budget.
Save and invest for the future. For most of us, this includes retirement planning. Reaching a comfortable retirement is a long-term process that takes careful planning, commitment and years of dedication, both personally and financially. Be sure to also build an emergency rainy day fund. Most commonly, people strive to keep between three to six months of expenses in savings.
While Tax Day has passed, tax scams have not. One of the most common tax scams is tax-refund fraud, which robs Americans of $6 billion annually. Filing your tax return early and knowing the warning signs of fraud will help you safeguard your finances. Knowledge is your best defense against becoming a victim of financial fraud. Verify the license of the company or individual with the OFR before you do business. Get any agreement or other materials in writing and read everything completely to be sure you understand the financial agreement or product. You can find more information on the red flags of fraud on our website, www.flofr.com.
And remember, it is never too early or too late to learn how to make sound financial decisions.
Drew J. Breakspear is commissioner of Floridas Office of Financial Regulation.
