Step 5: Adopt Good Financial Habits
Developing smart spending and saving habits are crucial to rebuilding your credit score, and one of the best ways to do this is to create a budget that accurately reflects how much you earn and how much you spend. With a budget you’ll know how to live within your means, and you’ll be able to manage your money better.
A budget, essentially, is a spending plan for your money. By giving every dollar a job, you’ll be able to determine in advance whether you’ll have enough money to cover all your expenses. And if you don’t have enough money to cover your expenses, you can use your budget to prioritize your spend and focus your money on areas that are most important to you. This free budget calculator spreadsheet is a great tool to help you start building a realistic budget.
Once you’ve developed a budget, it’s time to get into the habit of setting up money reminders. Create a checklist of all your bill payments and note all your payment dates, either in an agenda, a wall calendar, a smartphone app, or a Google Calendar notification. Whichever method you decide to use, it will serve the same function: it’ll help you remember where your money needs to go and when, so you’ll never make a late payment.
Another good financial habit to adopt is learning how to live frugally. Living frugally is more than just pinching pennies and depriving yourself of things that bring you joy, just so you could save a few dollars. Instead, it’s about making mindful choices so you’ll be able comfortably live within your means. By living within your means, you’ll be able to pay off your debt and rebuild your credit faster so you can enjoy the small – and big – joys in life. Here are some frugal living habits you can start incorporating into your day-to-day living.
Stick with these good financial habits, and it’ll be much easier for you to reach – and maintain – your new and better credit history.