I am by no means a “Spring Chicken,” but as part of the Morgan Franklin Fellowship Foundation (MFF) team, I have learned a few things. When I began working with MFF, I thought I was doing rather well financially speaking. I had the following “under control:”
- Paid my bills on time
- Bought things I needed and sometimes wanted
- Invested money in retirements accounts periodically
- Owned my own home, car, and other valuable personal assets
- I had insurance coverage for life, health, home, auto, property
- Saved money occasionally
Through my role in developing the online financial learning program for MFF, I learned that my money could do more for me if I made a few changes. I thought I would share some of the new “tricks” I learned from being part of this amazing program.
Trick #1 – Pay Yourself First
I was taught to pay my bills first, and that really didn’t focus as much on a budget approach as it did on knowing what bills I had to pay, and knowing that I had enough money to pay them all each month. This strategy also did not consider saving and investing as part of the budgeting process; it was more of an after-thought if there was any money left over. So I have gone from saving or investing what was left over at the end of the month/year to systematically putting money aside each month for saving and investing. I learned the value of putting money into separate accounts so that I could see them grow over time.
Trick #2 – Create a Zero-Balance Budget
As I pointed out above, my earlier attempt at budgeting was more of a month or year-end review to see where I spent my money. Now, at the end of the year, I review my budget from the previous year and plug in the “known” amounts for things like utility bills, insurance, loan payments etc. I have added line items for personal spending, home and property repairs, and taxes (property and income). Tax money goes into its own account so the money is available when property taxes and/or quarterly taxes are due. I learned that every dollar needs to go into a category, and if things change, then the dollar amount in the categories needs to change. Some people work on a percentage budget, but I find that the zero-dollar budget works great for me. Many people think you should have money at the end of a budget… but ACTUALLY it should always be zero. Every dollar has a job. Make sure your money is working for you.
Trick #3 – Manage Your Credit Score
I knew that my credit score was something I needed if I was going to take out a large loan, but I didn’t realize what types of things impacted my credit score. In the past, I would check my credit score before I made any large purchases. I learned how late payments on bills, increasing or lowering credit limits on credit cards, and even the number of inquiries on my credit make a difference to credit score. Now I check my credit score at least once a quarter, and have set up notifications so I am alerted if there is any significant change to my score. I have learned to pay attention to the things that can impact my credit score and that closing credit card accounts is not necessarily good for my credit score.
So being part of the Morgan Franklin Fellowship Foundation has taught this old dog a few new tricks, even though I was not intentionally trying to learn how to become more financially successful. If you would like to know more about what MFF can do for you, check out our complementary Standards of Financial Literacy course, our blogs about money and finances, or our videos on YouTube.