Financial Tools You Might Not Know About

In the world of finances, there are many tools available to set yourself up for success. When used properly, these tools will help you succeed in your budget. Check out our top 5 financial tools you should add to your tool belt.

1. Budget

The budget is the number one tool you need in your financial tool belt. It assigns a responsibility to every dollar in your budget, and requires you to stick to that budget if you want to be successful with your finances. It prevents you from spending money outside of the parameters. When there are mistakes, you can easily correct course as you can find where the issues are in the budget.

2. Credit Cards

Despite popular belief, credit cards can be a tool used for financial health, rather than financial distress. When used properly, and with financial literacy, credit cards can be used accurately to help move forward in a financial system. Whether it be using your credit card to pay for incidentals on a hotel stay, or paying for regular expenses, then using your budget to cover the credit card bill – credit cards can be a positive addition to your budget. But, we should caution – DO NOT use credit to buy things you would not normally buy, nor things you cannot regularly afford. It’s not an option to “step up” your lifestyle.

3. Loans

Similar to credit cards, loans are another tool to use to set yourself up for financial success, when used properly. Without loans, very few people would have the ability to own a home. However, the financial cost of a loan is a factor needing to be considered. For each loan, there is a breakeven point – where the amount paid in interest is higher than the value of the asset. If you use loans wisely, you can be sure to be below the breakeven point every time. A hard fast rule here – DO NOT let your loans reach maturity prior to paying them off. Most loans, if you wait until maturity (IE: 72 months for a vehicle loan), there will be a significant amount paid towards interest, and you will have paid far more than the original value of the car. DO pay them off early. Use our budgeting tool to make sure you have enough money left over each month to pay the loan off early.

4. Online Banking

Sometimes, online banking can really be an understated tool in the financial world. There are so many options and tools within each online banking system, it’s hard not to be impressed. Between online banking, automatic transfers, and 24/7 account monitoring, this is definitely a tool you should be using regularly.

5. Retirement

Each retirement account is an important asset. You can save for your future goals automatically, and most companies will match these contributions. Especially if you are younger than 35, the retirement account is essential. Monitor your retirement accounts to plan towards your future financial needs.

There you have it! These 5 financial tools are going to set you up for success in your financial journey.