Personal Money Management: What You Need to Know

The average American doesn’t have a high degree of financial literacy – it is estimated that one-third of American adults cannot pass a basic financial literacy test. While much of our lives is devoted to earning and spending money, many of us are unfamiliar with the fundamental economic dynamics that can help us achieve our financial goals over time.
Here are a few important concepts you must know if you are going to manage your finances – and your debts – effectively and responsibly.

What is the value of your assets?

Your assets are anything that you own that has significant monetary value. The most common assets include the money in checking, savings, investment, and retirement accounts; homes and other real estate; cars; and precious medals.
Some people have alternative assets which may have substantial value, such as works of art, jewelry, and collectibles. It is very important to have such valuables periodically professionally appraised, so that their provenance, authenticity, and market value can be assessed and verified.

What is your net worth?

Net worth is the total amount of funds you possess after you deduct your total debts (mortgage, credit card, student loans, personal loans, car loans, etc.) from your assets. A significant percentage of Americans have a negative net worth, meaning that even if they were to liquidate all of their assets, the amount would still be lower than the amount they owe.

What is your net income?

Your net income is the money you take home after tax, insurance, and investment deductions.

Do your debt balances check out?

A surprising number of people with credit card debt do not check their monthly statements to make sure that their debt is diminishing – they simply make their minimum payments. It is important to know how your payments affect your balance if you are going to make progress in clearing your debts. You should check your debt balances at least on a monthly basis, to make sure that your loan repayments are being posted correctly, and that you understand the fee structures for all of your loans. Staying on top of your debt balance is essential to maintaining control of your debts.

What are all of your general expenses?

You cannot set an effective budget without knowing exactly how your money is being spent and (roughly) how you are going to spend your money in the near future. Start with your essential monthly expenses (utilities, rent, groceries, childcare, medication, insurance, phone/internet, gas/transportation, loan repayments) go on to list bi-monthly or infrequent expenses (property taxes, clothing, home maintenance, and repairs) and non-essentials (entertainment, restaurants, luxury items).
You can keep an Excel budget sheet or use a budgeting app to help you keep track.
While personal finance is a complex subject, these are the foundational issues that must be addressed before any significant progress can be made in debt reduction. You may discover that some lifestyle adjustments and vigilance are all you need to clear your debts quickly; you may also find that you need extra help managing your debts.

Americor: Helping borrowers resolve their debt obligations safely and quickly.

If you need help taking charge of your financial situation, Americor offers lending solutions and debt consolidation services that may give you the support you need to address your financial difficulties. Please contact the team at Americor to learn how you can restore your financial security.