The 8 Most Important Financial Facts To Know
When it comes to managing your finances, you don't need to become a financial expert and know all the financial facts. But knowing a little about personal finance and your specific economic environment can help you avoid unfavorable monetary circumstances or help you out of them quicker and with fewer financial stress headaches. Check out this guide to learn some facts about your finances.
Make Sure You Know About These 8 Essential Financial Facts
1. How Long Your Savings Would Last If You Stopped Working
As far as financial facts go about your savings, you should aim to have between three and six months' worth of essential expenses saved in case you need to stop working for whatever reason. When checking your savings, multiply your expenses by three and six to find out how you are looking. There are six key costs to focus on when considering the length of your savings. Those are:
- Health insurance.
- Other household expenses.
2. The Factors Affecting Your Credit Rating
When it comes to your credit rating, you’d be surprised at just how many factors affect it. For example, having a poor score can negatively impact your chances of getting a good deal on your mortgage, credit card, or loan. Therefore, it's worth understanding the contributing factors so you can maintain or improve your rating. The main five factors are:
- Payment history — As the most important metric, it accounts for 35% of your overall rating. After all, lenders need to know you'll repay your debt on time and in full.
- Amounts owed — Represented as the credit utilization ratio, it's determined by dividing your revolving credit in use by your credit limits. Using over 30% is considered unfavorable to lenders.
- Length of credit history — Making up 15% of your FICO score, it includes the age of your oldest and newest account. The longer you've held credit, the higher your score.
- New credit — The number of hard inquiries accounts for 10% of your total score. A bunch of accounts or inquiries signals trouble for lenders.
- Credit mix — Those with the highest credit scores tend to have a diverse credit mix filled with a car loan, mortgage, credit card, and others.
3. Which Day Your Standing Orders And Direct Debits Go Out Of Your Account
If you are trying to avoid getting into a bad financial situation, the next financial facts you should know are about your account and your direct debits. Being mindful of the day your standing orders and direct debits go out of your account every month is the ultimate way to never be hit with an unaffordable overdraft fee.
Knowing you're going to end up in a shortfall is better than ignoring the situation. At least if you know it is about to happen, you can do something about it like move money from a savings account or arrange a larger overdraft. If you are blindsided, you could feel overwhelmed and unable to think of good ways to handle the situation.
4. Debt Isn't Always Bad — It Depends How You Use It
The next on the list of financial facts you need to know about is debt. Depending on the type of debt you are dealing with, it isn't always bad debt. For instance, putting your money in a high-interest savings account might be worth the risk of inquiring debt. However, borrowing to buy something that rapidly depreciates or is challenging to sell may not be worth the risk of debt.
5. Saving Isn't The Same As Investing
Another of our financial facts you should know is about saving versus investing. Saving is something we all need to do. You should have a savings account in your bank in case of emergencies. However, if you aren't also investing your money in stocks and bonds, you're missing out on letting your money work for you. You need to do both to cover yourself financially.
6. The Statutory Sick Pay Rate For South Carolina
When you start working at any job, you need to know the statutory sick pay. This is the minimum amount of sick pay that your employer must pay you when you get sick and can’t work. For South Carolina, you earn a minimum rate of one hour of paid sick leave for every 30 hours worked. It is important you know this so you know how getting sick will affect your finances.
7. The Rule Of 72
There are a ton of rules in the financial world that can help you out. One such rule is the rule of 72. The rule of 72 is an easy way for you to calculate how long it would take an investment to double in value based on the rate of its return. Let’s say your account gets you 3 percent a year. You’ll divide 72/3 and the result – which is 24 – is the number of years it’ll take to double your money.
8. An Installment Loan Can Help Fund Emergencies
The last fact to know is that installment loans can help you fund emergency expenses. An installment loan allows you to get cash as soon as the same day and then lets you pay back the loan in installments. We here in Carolina Title Loans, Inc. can help you get the installment loan you need. Just fill out the online form and someone from the nearest location will give you a call.
Learn These Financial Facts Today!
When it comes to your finances, it is important to know some financial facts. Knowing these facts can help you navigate your money and get out of – or even avoid – a struggle with money. And if you need help with emergency expenses, get an installment loan! Fill out the online form on our website to get started on the simple process right now.
Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.