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4 Key Concepts That Teach Children About Money

Understanding and promoting the importance of financial literacy has been a part of our national dialogue for well over 200 years. Consider this letter written by John Adams to Thomas Jefferson recognizing the need for financial literacy, “All the perplexities, confusions, and distresses in America arise, not from defects in their constitution or confederation, not from a want of honor or virtue, so much as from downright ignorance of the nature of coin, credit, and circulation.” That letter was dated August 23, 1787. Here we are 230 years later—occupying the most sophisticated age the world has ever known—and that statement couldn’t be more relevant. Though it is safe to assume that John Adam’s words related more to the nation than to specific individuals, it is poignant as to the power of his convictions, that solving some of our social ills require a unique understanding of money. The awful truth is that the average household is often ill equipped to sufficiently educate their children about money. In many instances parents themselves may have come from a background where they were not exposed to a conceptual understanding about money.

Having worked in the financial field for over two decades, I saw up close that many individuals do not have financial knowledge that extends beyond owning a savings or checking account. Because money permeates every aspect of our lives, whether it’s shopping, recreating, planning for college, looking for a job, getting married, purchasing a new car, home or retiring, it warrants special focus and attention.Over my career I have observed four key age appropriate concepts that can help guide the parent/child money conversation.

Financial Literacy for Kids –

Concept 1: Budgeting

One of the ways parents can communicate the concept of budgeting to their children is by using the term in conversation. Children are curious and spontaneous by nature and will give parents ample opportunities to talk about money, especially when the conversation begins with, “mom/dad can I have?” By using such opportunities to set expectations with your child that the family is on a budget and will have to plan for purchase, (even if you can afford it) is one way to introduce your child to the concept of budgeting. This is not a no… it’s more of a let’s review this request. Budgeting, as interpreted by your child, can be eventually perceived as a unique family value. Secondly, use the opportunity of providing an allowance to your child to familiarize them with the practice of budgeting. It could be as simple as teaching them how to plan for what they want as well as how to save for longer term goals, such as Mother’s or Father’s Day gifts. Just like any other educational concept, the earlier children are exposed to them, the more likely they become proficient later in life.

Financial Literacy for Kids –

Concept 2: Credit

Understanding credit, how it works and how it should be managed is currently a priority on the nation’s Financial Literacy agenda. With trillions of dollars in both student loan and credit card debt negatively impacting millions of Americans, it begs the question whether thing’s would be different if people knew more about credit much earlier in life. It is critically important to not only create a foundation of understanding for our children on the management of credit, but to also help them avoid the pitfalls of being in lifelong debt. A simple exercise: use a one dollar coin and several pennies on the kitchen table to demonstrate how one dollar borrowed at 7 percent interest can be visually represented. I have a feeling this exercise will work just as well with chocolate chip cookies.

Financial Literacy for Kids –

Concept 3: Savings

Kids are generally not instinctive about preparing for the future. Such planning comes with insight and maturity. It is the responsibility of parents to teach children how to plan. One of the first steps to take in that regard is to practice what you preach. It is much easier to show your child than to give them a lecture.  Although the lesson here is fairly simple to communicate, it is easier said than done. That said, kids love a challenge, so perhaps you can incent them to save a percentage of their income for a specific reward.  For example, every hundred dollars they save you give an additional twenty to their savings fund. The goal of course is to encourage saving versus indiscriminate spending. Be creative, find ways to engage your children to save at least 10 percent of their income.

Financial Literacy for Kids –

Concept 4: Investing

Before children get old enough to work part-time or assert their independence socially and financially. It would serve them well to be familiar with the key financial principle of investing. Broadly defined investing is expending money with the expectation of achieving a profit or material result by putting it into financial schemes, shares, or property, or by using it to develop a commercial venture. However, in the context of a middle or high schooler for example, investing could be time invested in studies, to secure better academic scholarship opportunities and ultimately better college and career opportunities. Parents must be wise enough to link the concept of investing to matters where children can relate. For example, kids are engaged in the world of social media and mobile technology. Those platforms provide a great segue into an investment discussion as it relates to the producers of those products and services. Talk to them about the unique opportunity to not only be a consumer of great technology but how to also invest in something you use or enjoy by becoming part owner through stock purchasing. Plant the seed that investing can be a great vehicle to goals achievement and financial wellbeing.

These four concepts are constant throughout our entire financial lives. Both adults and children should have a good understanding of these 4 key concepts about money. The goal should be to promote the principles of financial discipline. We all know how critical it is for kids to formulate strong social footing, but we should all recognize the importance of developing strong economic footing as well.

The Community Connection

For many families in the low and moderate income demographic, non-profits and faith-based organizations have become important surrogates in bridging the knowledge divide for both parents and children as it relates to understanding money. One example would be the recent partnership between Operation HOPE, a major international financial literacy organization, and the Church of God in Christ, Inc., a 6-million-member denomination.  Their joint initiative seeks to provide Financial Literacy programing across the nation through their network of local churches. In addition, many local banks in partnership with the Federal Deposit Insurance Company (FDIC) also provide a Financial Literacy Curriculum called Money Smart, a financial education curriculum designed to help low and moderate income households. Parents can seek out these organizations either locally or via the internet to learn more about their financial education programs and how they can be accessed either locally or remotely. The Consumer Financial Protection Bureau is also a great financial education resource for both adults and youth. They provide a host of both printed and webinar content in their resource library.

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There is no such thing as a credit score…Let me explain.

Let’s be honest, many Americans may have some idea of who FICO is, but not everyone fully understands what FICO does or for that matter, how they do it. FICO was founded in 1956, and was originally called Fair, Isaac and Company. They are a data analytics company based in San Jose, California that focuses on credit rating services. FICO scoring models, which measures consumer credit risk, have become a fixture in the  consumer lending arena in the United States. FICO produces several of its general risk and industry specific credit scores each of which is unique to specific credit reporting agencies. For example, in the auto industry you may see up to 10 different credit scores, 3 from Equifax, 4 from Transunion and 3 from Experian. Each credit reporting bureau utilizes multiple FICO formulas or formula generations. (FICO formulas are periodically updated, using new data or algorithms)

To give some scope on the issue, you can have up to 56 different credit scores –which will likely increase to 65 as FICO recently added 12 scores to the total. These multiple scores are reflected across several industries such as, auto loans, mortgages, credit cards, installment loans, and in some cases auto insurance.

To sum it all up here: for each credit bureau, take Experian for instance, FICO will generally provide consumer credit risk scores for a specific industry, but because models are constantly being updated, you’re likely to see up to 6 different scores for that one industry on the same credit reporting agency. Now, multiply that number by 3 reporting agencies, not to mention the various industries involved and you should have a sense as to why you don’t just have a singular “credit score,” you actually have multiple credit scores, plural.

That said, it should now make more sense to you that your FICO credit scores do not match and that whenever you apply for credit, depending on what the consumer product is, your scores will be specific to that industry.

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Six Reasons to Purchase Your First Home

Having good credit is one of the best ways to maximize your ability to build a healthy financial future. Home ownership should be a part of that equation. Whether you see owning a home as part of the American dream or not, there are several important factors that make purchasing a home a great financial decision. If you’ve been thinking about becoming a homeowner, here are 6 key reasons for you to consider.

Ownership provides you Tax benefits.

The US Tax code incents home ownership by allowing home owners to receive a tax deduction for their mortgage interest expense, ultimately decreasing your tax liability. The way it works is that at the end of every tax year, home owners receive a copy of IRS Form 1098. Mortgage companies are required to send every mortgage holder, a copy of this form, (1098) which provides the total amount of mortgage interest paid on a particular loan for the tax year. Please note that the tax deduction is only attributed to the mortgage interest not the mortgage principal.

Fixed monthly housing expenses
According to a recent Bloomberg Report, almost 41 million U.S. households spend more than 30 percent of their income on housing. The reality of a growing population creating a higher demand for housing is affecting the cost and the options for housing. Purchasing a home via a conventional mortgage assures you the predictability of a fixed payment for the life of the home loan. In contrast to being a leasee who has less control from year to year in terms of what the monthly housing payment would be, particularly over a period of 2 or 3 decades. This is also a very important consideration in planning your long term financial goals.

Building wealth through asset appreciation
One of the more significant ways families are able to build wealth is through property ownership because home values appreciate over time. According to Zillow economists, “home prices have appreciated at an average annual rate of 3 and 5 %, depending on the index used for the calculation, home value appreciation in different metro areas can appreciate at markedly different rates than the national average.”  Given that some 85% of the home loan market are 30 year fixed rate mortgages, home owners will have three decades of appreciation to look forward to, provided that nothing catastrophic happens.

A home mortgage is the cheapest credit you can purchase
A home mortgage is a loan secured by a home or real property which is in effect used as collateral to make the loan. There are other factors to consider such as creditworthiness and capacity to repay.  As a result secured loans are less of a risk to lenders and are priced lower than unsecured loans, in which case a lender may be relying on the proven track record and capacity to repay of the borrower. Also in the case of a borrower default lenders are able to retain the collateral to offset the debt.

Investing in both the stability of your family and community
Owning a home give families a place and a space to create community with themselves and with those around them. Maybe it’s nostalgia but I’d like to think that everyone needs a north-star, a ground zero, a place to create childhood memories or neighborly camaraderie. Ultimately, stability is such an important component in the fabric of our existence. Whether it’s our immediate families, our communities or just our overall well-being.

Leaving a legacy for the next generation.
A home is more than just a good real estate investment it can become part of a family legacy. It holds both financial and sentimental value. As home owners prepare for retirement, estate or succession planning, ensuring the proper steps are taken to secure the family’s key assets are of tremendous importance. There are several reasons why leaving a home as an inheritance is extremely valuable. It provides the benefactor(s) a sense of stability, as well as a financial spring board from which they can launch their own lives as opposed to starting from scratch.

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4 Steps to Getting out of Debt

A recent report from The Pew Charitable Trust stated that 80% of Americans are in debt. The primary areas of consumer debt are mortgages, student loans and credit cards. These types of debt can generally be thought of as either good debt or bad debt. Borrowing to secure a home or acquire a college education is considered good debt because these assets (yes, an education is an asset) hold significant long-term value. Although credit cards can be extremely useful in cases of emergency and are exceptionally convenient in everyday commerce, they promote a buy now pay later culture. Thus, it is easy to build up sizable credit card balances which may ultimately cause difficulty later. Furthermore, this may also prevent you from addressing other financial obligations which can impact your financial well-being.

Here are a few steps that can put you on the right path to getting out of debt.

Step 1 – List all your all debts from the largest to the smallest. The purpose of doing this is to not only get a visual of your full financial picture, but to organize all your obligations in a comprehensive way so you can effectively implement your debt reduction plan. A debt reduction plan is a personal strategic approach to reducing your overall debt. Once you’ve listed all your obligations, you should note all your regular monthly payments; particularly your credit bureau reporting accounts. You want to make certain that under no circumstances are monthly credit reporting accounts neglected, as that would undoubtedly prompt further action from creditors and negatively impact your credit rating. Always prioritize payments to credit reporting accounts.

Step 2 – Before you create a schedule to start systematically paying off your debt, there are a few things you’ll need to commit to. 1) You cannot add any new debt during the term of your debt reduction schedule. 2) You must review your overall budget and cut all unnecessary spending (focusing on needs vs wants) 3) Given that your income more than likely will not change and monthly obligations will remain the same, you want to ensure that expenses are not out of control, so as to free up as much funds as possible to be used as a “debt reducer.” (The term “debt reducer” simply refers to the amount of funds that you have set aside either by curbing expenses or by paying off your smaller debts) The debt reducer is then systematically applied to paying off your outstanding debt obligations. The amount of your debt reducer should grow with each pay off.

Step 3 – You are seeking to create a snowball effect. Using funds from your debt reducer you are systematically targeting the smallest to the largest accounts on your list until they are paid off.  (The key to your success here is consistency) Once the first debt is fully paid, target the second smallest and so on until each is systematically paid off. The snowball effect kicks in once you begin to apply the extra funds from each of the (old) paid off debts. This will help accelerate paying off your obligations. For example, if you were paying say $75 a month toward your credit card account of $2,000.00 which is now paid in full, you can now use that extra $75 which can be applied directly to the next monthly payment on your list. Adding an extra $75 to your regular monthly payment will help decrease your debt much faster.

Step 4 – If after reviewing your income, expenses and monthly debt obligations you’ve determined that your situation is too overwhelming to handle — or that it’s simply not within your power to resolve – you should seek the advice of a certified financial planner or consumer credit counsellor. Usually counsellors can help guide you through the process of deciding which debt management option would best suit your needs. Options can range from using a debt consolidation loan, to filing for either of two types of bankruptcies (Chapter 7 or Chapter 11).

That said, be your own CEO. You actually can talk to creditors, negotiate with them regarding rates, payment amounts and even balances. Don’t be afraid to engage your creditors in conversation to your benefit. Taking these key steps will not only help you get out of debt, it will help you improve your financial discipline over time.

Here are a few debt Management resources.
Things to look for from a Credit Counselling Agency
Consumer Credit Counselling

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10 Critical Signs You Have A Debt Problem

There is no shortage of dialogue about how challenging debt problems are for many working and middle class Americans. According to a recent article by Money titled, “Americans Have So Much Debt They’re Taking It to The Grave,” 73 percent of the US population are not just in debt they’re literally dying in debt. Millions of families are grappling with the reality of living on the margins of financial freedom. Whether it’s related to wage stagnation, underemployment, college or consumer debt—or simply living beyond their means—many are falling through the financial cracks and are not entirely sure what to make of their debt situation or how to recognize the indicators that could lead to personal financial crisis. Here are 10 warning signs that you may have a debt problem.

1) Receiving frequent bank overdraft notices.
One obvious warning sign that you have a debt problem is receiving frequent overdraft notices from your bank about your account or accounts being overdrawn. You may even be afraid to “check” the balance in your check-ing account (pun intended). This is a telling sign that you’re not in a good place financially.

 2) You have difficulty meeting your personal financial obligations.
Another sign that you may have a debt problem is if you’re always playing catch up. Regardless of the extra hours you put in at work or the extra money earned at a second job, it never seems to be enough to cover your obligations. You’re constantly juggling your financial responsibilities and hoping that the juggling act doesn’t become a circus.

 3) You are always borrowing.
Whether it’s from friends, associates or even your retirement account, nothing screams, “I’m having financial difficulty,” than the constant need to borrow. It is another sign that you may have a debt problem.

 4) You are unable to save.
Not being able to save even a small sum of your income, whether it’s for emergencies or longer term financial goals, such as retirement is a definite sign that you could have a debt problem.

5) Your payments are occasionally late.
Because of your financial constraints, it is often difficult to ensure that all your monthly obligations are paid on time. As a result, you may be receiving reminders, or in some cases late notices. Be proactive in taking steps to address the problem once you’ve noticed this particular pattern. Late payments can negatively impact you by costing you late fees or by hurting your credit profile. It also signals that you may have debt problem.

 6) Your debt-to-income is over the top.
Your debt to income ratio is a simple calculation that measures how much debt you can carry comfortably based on your gross income. It is a simplified way lenders determine if credit applicants are financially able to take on more debt. The magic number is usually around 36% or less. If you’re in the 40 percentile and above, you’re carrying too much debt compared to your income.

7) You’re not sure exactly how much debt you have.
This may sound a bid outlandish, but if you’re not consistently budgeting and haven’t taken the time to review your overall financial picture—by assessing your income, expenses, assets and liabilities—you have no way of knowing exactly what type of debt situation you’re in. It may also mean that you also won’t know where to begin addressing it. You’re making a huge mistake if you’re not sure who you owe and how much you owe. Given that you could be in financial purgatory, it really makes sense to be as specific as possible about your debt problem before it gets any worse.

8) Your credit cards are maxed out.
If you’re short on cash and credit is the only way you can consume goods and services or pay bills, you have a debt problem. It is also likely you’ll see your credit card balances increase from month to month. Maxed out credit cards also mean that you’ll be paying much more for what you’ve purchased as credit cards interest rates may kick up; particularly when you carry monthly balances.

 9) You are constantly thinking about filing bankruptcy.
The stress of being unable to meet your personal and financial obligations can be daunting. The pressures can lead to consequential decisions that may impact you for a very long time. Bankruptcy is one such decision. There are other viable alternatives, however, such as talking to an accredited credit counselor. Any thought about the bankruptcy should be explored as a last resort and certainly discussed with the appropriate legal counsel.

 10) Talking about your financial situation is difficult.
You tend to get uncomfortable, embarrassed or perhaps even irritated whenever the conversation enters your financial space. The hyper sensitivity to discussing your financial picture spells that you have a debt problem.


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Debt Consolidation – Is it the right option?

​It is no secret that many Americans today are overwhelmed by some form of debt, whether its student loans, credit cards or mortgages.  In fact, the American philosophy may well be, “in debt we trust.” Many are faced with the challenge and stress of paying monthly debt obligations often on the verge of succumbing to personal financial ruin or eventual bankruptcy. One of the ways in which individuals try to address the issue is by consolidating their monthly debt obligations.

What Exactly Is Debt Consolidation?

Debt consolidation Definition: Debt consolidation is a ‘convenient’ financial tool (often a loan) that combines multiple, individual debt obligations into a single payment plan.

​​​In essence, the process known as “debt consolidation” is an effort to simplify or streamline all your monthly debt payments into one affordable monthly payment. The rationale, of course, is that it is much easier to pay one versus several monthly payments. Although in theory this may seem like a great idea, keep in mind that this ‘simplistic’ logic may not be so simple. In fact, there may be additional costs associated with specific consolidation options. You need to look past the allure of an initially lower payment amount and learn about the types of plans that may be most appropriate for you in both the short-term and long-term. 

Option one: Debt consolidation payment plan

A debt consolidation payment plan is a plan designed and administered by a third party such as a credit counseling agency,  whom you would authorize to negotiate with creditors to help reduce and pay off your debt. The plan allows you to make a singular monthly electronic payment to the credit counseling agency who in turn takes those funds and makes the various monthly payments to your creditors.  Some agencies charge a nominal fee for the service while others do not. This type of debt consolidation payment plan is not debt consolidation loan. Note: you may also hear this referred to as a “debt management” or “debt repayment plan.”

Option two: Debt consolidation loan

A debt consolidation loan, as the name suggests, is a loan designed to consolidate your existing debts by paying them in full with the proceeds of the debt consolidation loan.  You are basically transferring the debt into a new loan with one monthly payment. Because debt consolidation loans offer short-term affordability, it often means payments will be lower but loan terms will be longer and perhaps more costly. You should also take careful note of the interest rates being offered as they could be higher than the rates currently offered on your existing debt.

Things to keep in mind before using a debt consolidation loan

Borrowing your way out of debt is counter intuitive. As a matter of common sense we generally don’t use fire to put out a fire. Why then would we try to borrow our way out of debt?

Address the underlying problem
Being in debt does not occur overnight. It is often preceded by a number of factors which may include job loss or prolonged illness, but more often than not, poor financial habits. It is critical that you address the underlying problems which led to the path of overwhelming indebtedness. Developing discipline and the savings strategy necessary to avoid a financial crisis should be a major priority. Whether it is done individually or with a professional, building a financial action plan to help address the core issues will be key.

You may end up paying more $ over time
There is big difference between a consolidation payment plan and a debt consolidation loan. By consolidating all or part of your debt obligations into one payment, makes it much easier to afford and manage. However, you must clearly understand the overall financial consequences of borrowing to pay off debt. Loans consist of principal and interest. The longer the loan the more interest you pay. Again, you may feel a sense of relief in the beginning by lowering your monthly payments, but when it all said and done if you’re already in debt, borrowing is the last thing you should be thinking about.

For anyone struggling with debt, the good news is that there are options available to you, just make sure your consolidation option doesn’t lead to more indebtedness.

Related articles
4 Steps to Getting out of Debt
How to choose a credit counseling agency

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Credit Card Debt Reduction

According to a recent report from, 35% of consumers use credit cards as their preferred method of payment; For online shopping it is 48%. In addition, it stated that credit is the preferred payment method for most people at department stores. Given the convenience that credit cards offer it is no wonder that credit card debt have grown into a major financial hindrance for many credit card users. Here are couple things to remember in order to reduce your credit card debt.

Credit card Interest Rates will hurt you
The national average for credit card interest rates is 15.18%. What this means in the simplest terms is that for every dollar that is spent via credit card, consumers pay on average .15 cents (rounded) on the dollar.  Then there’s the Annual Percentage Rate or (APR) which factors in the small amounts of interest that is compounded on account balances daily ultimately increasing the overall cost of credit. If you don’t manage your account effectively you’ll feel like you’re not making any progress reducing your credit card debt. 

Pay off your balance(s)

To reduce your credit card debt you have to minimize the amount of interest you pay on your card. For instance if you carry a monthly balance on your account, in addition to your regular scheduled monthly payment you’re also going to be paying interest on the full outstanding balance. The interest rate on your rolling balance is normally much higher as well. To avoid paying a higher rate of interest try to pay off your balance every month or pay more than your scheduled monthly payment. This will reduce your credit card debt and minimize the amount of interest you’ll have to pay. 

Avoid Cash Advances
One area to avoid as it relates to reducing your credit card debt is “credit card cash advances.” Cash-advance interest rates can range from 9.99 percent to 36 percent, with a median rate of 23.53%. Can you even imagine paying 23 or 36 cents on every dollar? (see 2015 Cash Advance Survey: Convenient cash will cost you plenty.) The bottom line is credit card cash advances are very costly and should only be utilized as a last resort if at all. 

Finally, credit card debt can have a negative impact on you financially, especially if you carry balances over from month to month. It is possible however to mitigate some of those negative factors and reduce your credit card debt by paying attention to interest rates, paying off balances and minimizing cash advances. 

Related Articles

Getting out of Debt

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How To Improve Your Credit Score

Improving your credit score can be an intimidating task for many. It often involves many hours of reviewing credit reports, negotiating with creditors and communicating with various credit agencies. But it’s definitely worth the time and effort. Here are six key steps that can help you improve your credit score.

1. Get hard copies of all your credit reports

You are able to get a free hard copy of your credit reports from each credit agency once a year, (,, and or by contacting Annual Credit

2. Review your report for errors and derogatory information

It is essential that you understand what’s on your credit report. A hard copy is much easier to go through and gives your the ability to both highlight your report for errors and identify which accounts are in good standing or derogatory. Focus on confronting what is hurting your credit (delinquencies, collection accounts) Anything that was not paid as agreed is likely having a negative impact on your credit.

3. Open a secured credit card

If you do not have an open credit account then opening one will help improve your credit. Opening a secured credit card will positively impact the factors that contribute to a good score. Those factors include payment history 35%, credit utilization rate 30% and type of credit or credit mix 10%. These credit score factors account for 75% of your credit score. Also make sure that your secured card reports to all the major credit bureaus not just one. Although you may still have negative information on your credit file, improving the positive credit account information will help improve your credit score.

4. Dispute errors 

All errors should be immediately disputed with the respective credit agencies. The credit bureaus in turn have 30 days to respond to your dispute(s). Also if you have collection accounts or public records older than 5 years listed on your report, be aware that they are close to being deemed legally uncollectible, due to statute of limitations laws. It may be best not to worry about those items since they will come off your report in a matter of months. (In most states unsecured debts are uncollectible after 6 years) Be careful not to submit frivolous disputes as it can result in the bureau flagging your account  and not accept future disputes from you. The credit bureau will not remove information that was reported correctly by a provider.

5. Keep outstanding balances under 29%

Another way to improve your credit score is by keeping all outstanding credit accounts balances, such as credit cards, below 29%. FICO scoring algorithm monitors how you manage your credit accounts and will penalize you for carrying higher outstanding balances in relation to your account balances. Simply having a credit account is not sufficient to maximize your score – Managing it effectively does.

6. Never miss a credit account payment

No category help improve your credit score more than payment history. Your payment history is reflected in your credit report by a month to month record of made or missed payments. This is also the most weighted category in the FICO scoring formula and represents 35% of your credit score.

By ensuring your monthly credit payments are always made as agreed will help improve your credit scores.  Remember, creditors seek a simplified way in which to assess risk. Although your credit scores do not tell your entire story, they reflect something about you. It is the primary method creditors use to quickly gauge your financial capacity and character. Taking these key steps will improve your credit score.

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Ways to Save Money On a Tight Budget

When you’re on a tight budget and things are financially limited, it becomes very difficult to save money. Here are a 12 ways that you can save money on a tight budget.

Review Your Budget

One of the primary ways you can save money when you’re on a tight budget is to take a good hard look at your financial situation. Translation: review and reevaluate your budget (that is, if you’re using one). A budget should help provide a road map for your priorities, meaning that it should give you a line by line indication where money comes from (income) and where it goes (expenses). If you don’t have a budget, or haven’t used one in a while now would be a good time to revisit that idea. Putting things down in a visual format is much more effective than making guess-timates in your head when it comes to money. You cannot address what you can’t see. It is not only good practice, it will help you build discipline to make the necessary adjustments to help you save. You’d be surprised at the number of expenses—even the small ones—that could be eligible for big savings if you just spell them all out first.\

Saving Money On Fees

After reviewing your budget and making the necessary adjustments you can then review all your financial products and services such as bank accounts, credit card accounts that may be incurring fees. Fees such as ATM fees, bank service fees, late payment fees, overdraft fees and credit card fees can be significant. They should be minimized at all cost if not eliminated. In some cases, overdraft fees can be $35 per occurrence, and out-of-network ATM fees can be up to $5.00 per transaction. Some bank Managers do have discretion on fee reversals, so, if needed don’t hesitate to ask for leniency if you were hit with any such fees. It never hurts to ask. Every extra dollar matters when you’re on a tight budget and trying to save money. Easy rules to follow include skipping the back/forth at the ATM multiple times per week (especially if there may be fees involved). Get enough money to last for the week—or until your next payday—and make your money stretch. Psychologically, it is also more difficult to part with cold, hard cash than it is to whip out a plastic debit or credit card.

Compare Prices

Being an educated consumer by comparing prices is one of the best savings strategies when you’re on a tight budget.  Because of the competitive nature of the consumer market, you do have the ability to compare pricing on virtually every good and service you use. By utilizing your right as a consumer to compare pricing you can literally save thousands of dollars annually. The difference between designer brand clothing and store-brand clothing, for example, is not just a label, it could be anywhere from 60-300%.  With that in mind, you should shop through any of your loyalty or membership accounts that may save you an extra buck or two. For example, if a retailer offers a discount for AAA members, or a student discount, take full advantage of it.


With the advancements of digital technology, home entertainment packages now include a variety of services, which can include cable TV, phone, internet and even alarm systems. In an effort to recover some savings it may make sense to revisit your overall package and downgrade your service to a lesser expensive tier in order to save on your monthly subscription. Basically, you can look at your service options to see where you can save money. Consider removing a non-essential service like premium movie or sports channels, which tend to more expensive. You can also consider going back to the basics and just use an internet connection which then allows you to use access services like Hulu and Netflix for a far lower price tag. And if you really want to go old school, you can rent books and movies (DVDs) from your local library for free. And yes, I know this can cause anxiety, but it’s a viable strategy to save money when you’re on a tight budget.

Eating In Means Cashing In

Food is a basic human necessity. We simply could not survive without eating. Although we no longer have to chase wooly mammoths to survive, we do have to eat every day. That said, the convenience of fast-food restaurants and vending machines has made it a little too easy. In fact, we have the ability to eat 24-7. Although fast food is generally inexpensive, the consistent purchasing of food on the go adds up. Purchasing and preparing your own food for breakfast, lunch (brown bag) and dinner is not only cost effective, it can be a much healthier option as well. Plus, there’s just something special about home cooking and having leftovers particularly when you’re on a tight budget.

Look For Close Out Sales, Discounts, and Coupons

There are several ways you can save on purchases. Many retailers periodically offer special discounts to entice buyers. Sometimes this may be a ‘going out of business’ sale or inventory liquidation sale. Look in your local newspaper or circular (the weekend editions are best) to find and hunt for deals. In addition, coupons represent an amazing opportunity to save on a tight budget. Some families have made using coupons a way of life. By devoting time to seek out and learn about coupons you can significantly reduce the amount of out of pocket funds used to purchase everyday items. I’d be totally surprised if there weren’t coupons for just about every household item we use. Bonus tip: you can also try bartering with friends and family…Hey you’re save on a tight budget.

Delayed Gratification

In a culture that is synonymous with instant gratification. It has become increasingly difficult to go against the grain even when you’re trying to save on a tight budget. There is absolutely nothing wrong with consuming goods and services that we need, provided that we are disciplined about our spending. Where we experience pitfalls is when we become impulsive buyers. By setting financial priorities based on your monthly budget, you would have given some forethought to your wants versus your needs. Delaying gratification will not only help save you money, it will help you stay on the path to better financial discipline.

Renegotiate Monthly Payments

In some instances, if you are able to prove financial need, creditors may be willing to work with you to help create a more affordable monthly payment. Home mortgage and student loan companies are a couple examples of types of creditors that may be worth talking through the possibility of re-negotiating lower payments to help save you money when you’re on a tight budget.

Modify Your Diet

As a vegetarian I notice that I spend the majority of my time shopping in one section of the grocery store…usually the produce section. Generally speaking, fruits and veggies are less expensive than say steak. Because, I have the ability to control my food choices, I can ultimately control my spending. Given that globally we are becoming more health conscious, it is always a good practice to revisit our eating habits, since, “we are what we eat.” In addition, unhealthy habits such as smoking or excessive drinking also contribute to draining our financial resources. Living a healthier lifestyle will not only improve your overall health, it can help you save a few dollars when you’re on a tight budget.

Cancel Monthly Subscriptions

Being on a tight budget forces you to constantly look at your financial picture and more specifically, how you can decrease expenses. In so doing, it may be a good time to go through your bank and/or credit card statements to determine whether or not there are magazine or other types of subscriptions which may need to be cancelled. Depending on the nature and the amount of the subscription, you could be saving hundreds of dollars annually by cancelling the account. For example, instead of having a monthly $19.99 or $239.88 annual subscription taken from your account, you can use those funds to pay off bills or build your personal savings.

Sell Items on Ebay

You remember the saying, “One man’s trash is another man’s treasure.” Well that does have some relevance here. provides a platform for anyone to both sell or purchase items anywhere in the world. You can also use emerging sites like Bonanza, or a local Craigslist site. That said, there is a market for used items such as clothing, household items, books and collectibles. In fact, you can sell virtually anything online or on a site like eBay. Take a look around your home and locate items that you no longer use or find useful, take some pictures and post it online. You might be pleasantly surprised to learn that there are people who can’t wait to give you money for stuff you didn’t need. How’s that for savings.

Be Creative About Recreation

Saving money on a tight budget doesn’t mean you can’t be creative. If anything it should make you become more creative. Given the importance of recreation, it becomes even more relevant to find savings strategies in which to facilitate recreation. Never underestimate the power of experiencing and appreciating the beauty of our natural environment in a new way.  Taking walks or jogging in a public park or along a public beach and utilizing trails for hiking are not only cost effective but also very positive ways we can impact our quality of life which saves money long term on our physical and mental health particularly as it relates to the stress caused by being on a tight budget.