Financial Literacy

Establish yourself financially by building good credit and budgeting to keep your "wants" under control:


Open up checking and savings accounts. Don't overdraw these accounts.
If you are considering requesting a credit card, first shop around for the best terms and conditions.
Use gas and retail cards responsibly and sparingly.
Make your monthly payments for loans and services (like your phone bill) on time each month.
Make a list of your values - the things that are really important to you - and set your goals to help you maintain those values.
Create a spending plan that meets your "wants" as well as your "needs." Your total expenses should be less than or equal to your total income. If your income is not enough to cover your expenses, adjust your spending plan by deciding which expenses you can change.
Periodically evaluate your spending plan to make sure it is still meeting your needs and achieve your goals. Update if necessary.
Review your credit report once a year to make sure it is accurate.
If things are getting out of control, contact your creditors, seek help from a reputable credit counseling service, or look into debt consolidation.


Start saving now! Think you can't afford it? Try paying yourself first. When you pay your monthly bills, write out a check to you, and deposit it into your savings account. If you lack the discipline to do this, find out if direct deposit is available through your employer. With direct deposit, a specified dollar amount is deducted directly from your paycheck and credited to your savings account at a bank, credit union, or other savings institution.


Start an emergency savings fund equal to three to six months of your normal monthly earnings. After you have an emergency fund, monthly savings can be set aside for vacations, a new car, marriage--important but expensive goals!


Use your credit cards wisely to help you establish a solid credit rating and avoid financial problems. Every time you use your credit card, you are borrowing money. If you don't pay off your balance each month, you will have to pay a finance charge.


When selecting a credit card, you should shop around for the best deal, based on your budget and repayment habits. Look for the following characteristics:


A low annual percentage rate (watch out for low introductory rates that are raised after a year or less)
The interest calculation method (affects how much interest you pay, even when the APR is identical)
Low or no annual fees
A grace period (may only apply if you pay off the balance each month; may not apply if you carry a balance or take a cash advance)
The credit limit (it may be a good idea to start small–say around $500-$1,500.)
Services and features, such as cash rebates, frequent flyer miles, extended warranties, etc. (while they may appear to be a good deal on the surface, they may be difficult to earn and redeem; evaluate these offers in terms of their value to you, and any extra credit costs you may incur)
Keep copies of all of your credit card records and receipts to compare to your monthly statements. Follow up on any errors. Shred or otherwise destroy carbons and receipts before throwing them away.




Find out everything you need to know about your credit report. If you have ever applied for a charge card, student loan, or other kinds of credit, you probably have a credit report (or credit profile). Credit reporting agencies collect and organize information about you and your repayment history, and make it available to those who are considering granting you credit. Landlords, employers, government licensing agencies, and insurance underwriters can also obtain your credit report.


Most negative information stays on your credit report for seven years, though some bankruptcies remain 10 years. Positive information stays on indefinitely. Inquiries stay on for six months to two years, depending on the type of inquiry.


You can request copies of your credit report by contacting the three major credit bureaus:


Equifax
www.equifax.com
(800) 685-1111


Trans Union
www.transunion.com
(800) 888-4213


Experian
www.experian.com
(888) 397-3742