Are You Frustrate With Your Money Management Skills (Part 3)?

I have already shared with you five insider secrets of money management and you can read about these secrets in the earlier posts. Here comes the last part of this series:

Secret#6: Pay your bills on time

Do you know that your credit history is built on your financial behavior? If you are wondering what financial behavior means? Then you are not alone. Financial behavior is defined by your paying habits. Do you pay on time all your utility bills, credit card bills, mortgage bill etc? Do you take more credit than what you can handle? All this explains about yourself and your financial management abilities. If you are late in making payments, then utility company or credit card company or other such companies may report about your behavior to credit bureaus who maintain your credit history. So now you see the link between your late paying habit and credit history connection. If you are wondering what would happen if it goes to credit history. Then here is a short brief of impact of such behavior on your credit. If you credit history has many such late paying behaviors indicated, it communicates that you can’t manage yourself professionally. This may impact your credit score which guides how much credit you can take from the lenders and what interest rate you will get. So when you go for shopping of mortgage, then you realize the real impact of your financial behavior. I can’t stress enough here that you should always pay on time.

Secret#7: Use credit wisely

If you are getting those pre-approved credit offers from credit card companies, then you are not alone. You should never apply for a credit card simply you are getting an offer from a credit card company. You should decide first if you really need another credit card. Do you already have credit cards? If yes, analyze how you are using these credit cards i.e. are you paying on time, are you paying full amount or just paying minimum amount every month etc. You should never use credit just because you are getting it. This could be a real trap for you if you can’t manage it. If you are already managing well and you need more for your small business or for buying appreciating assets, you should review the credit options. If you are planning to buy a plasma TV and you know that you can’t afford it, then don’t go for credit as you will get into a credit trap which can ruin your life.

Here is my grandpa’s advice for you: Use credit for buying appreciating assets and use your money for buying depreciating items.