You don’t need to earn a degree in finance or accounting to boost your financial IQ. There’s free information available online and several tasks you can perform to add to your knowledge base in this area. That includes simple actions like reading your monthly bank statements and checking your credit score frequently. We’ve included these on the list below.
If you’re feeling overwhelmed thinking about this, pause for a moment. No one is expecting you to know how to set up a debt snowball plan or analyze performance on an investment portfolio. It’s okay to seek professional financial help in those areas if you need it.
Breathe, relax, and try to do the following…
1. Study Your Bank Statements
Most banks and credit unions have mobile apps, so you can do this on your phone. Check your balances and statements daily to stay on top of your spending and saving. When your monthly statement comes in, study it carefully. Call the bank and ask questions if there’s something you don’t understand or look it up if it’s a terminology question.
2. Create a Budget to Track Your Spending
An important part of building your financial IQ is increasing your understanding of how much money you’re bringing in and where you’re spending it. Include everything, not just your fixed expenses like rent, utilities, and car payments. Grocery expenses and entertainment should be on there, as should take-out and restaurant bills. Variable expenses are the ones you may want to limit if you realize you’re spending too much.
3. Request Copies of Your Credit Reports
There are three major credit bureaus that credit card companies and banks report to. They are Experian, TransUnion, and Equifax. Each of them produces a credit report that you are legally entitled to have a copy of each year. The easiest way to get copies is by going to FreeCreditReport.com and requesting them. The site will also provide you with your most recent FICO credit score.
4. Periodically Check Your Credit Score
Credit scores are a primary factor in lending decisions and credit approvals. Spend some time reading up on the five factors that affect your credit score and check it periodically to make sure you’re on track. If you have a credit card, your score may be available through your credit card company’s website or mobile app. It can also be found on monthly loan statements.
5. Open a Savings Account and an Investment Portfolio
You don’t need to put a lot of money into savings right away, but you should work on consistently building your savings balance. As for an investment portfolio, think of it as a savings account with a higher interest rate. You don’t have to be an investment professional. Hire a financial advisor or use a mobile app like Acorns to manage investments for you.
<h26. Start Reading Financial News</h2>
Implementing each of the previous steps into your routine will boost your financial IQ and expose you to terminology and concepts that were previously unfamiliar. Reading financial news daily, even for a few minutes in the morning, will enhance that knowledge. Use it for your own benefit and don’t be afraid to share it with others. You might boost their financial IQ, too.
Kevin is a former fintech coach and financial services professional. When not on the golf course, he can be found traveling with his wife or spending time with their eight wonderful grandchildren and two cats.