How To Make Clever Money Decisions by Improving Your Financial IQ

We’ve all heard the saying “be smart with your money,” but how many of us actually practice what we preach? These days it takes more than cutting back on expenses and watching your wallet to make ends meet. You have to be proactive and take those smarts to a whole new level. Improving your financial IQ is one way to make yourself feel like a genius when it comes to managing your money. Here are a few tips to help get you started.

Don’t live in a cave

Get out. Educate yourself. A quick glance at most community calendars reveals there’s always something going on – even lessons on how to manage your finances. Most of the time those courses are economical. We found an introduction to Quickbooks class for only $30. But if sitting in a classroom isn’t your thing, we’ve heard of people meeting over coffee to exchange financial tips. Whether it’s hooking up with other like-minded individuals to discuss investment opportunities, or meeting people who like to clip coupons, it pays to network – literally.

Don’t be lazy, look for “gray charges”

It so easy these days to let things slide. We all get busy. Nobody likes to sit down and do the tedious task of balancing a checkbook or reviewing a credit card statement, but you should. Crooks are smart – you need to be, too. Look for “gray charges.” Those are unexpected expenses that are easy to miss – such as a merchant double-charging your debit card or a free trial offer that expired. Keep careful records of what you spend. That way, you’ll know when something doesn’t look right. Want to read more on gray charges? Visit Online Bank Tours.

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Be proactive, not reactive, about credit fraud

Some criminal elements are smart enough to skim your bank account. They obtain your information by placing a device on credit card readers, often times located on gas pumps, collecting your data – and then your money – but pretending to be you. Don’t wait for your bank or credit card statement to unearth these charges. Get in the habit of checking your balance every day. If your bank offers free e-mail alerts, sign up for them. Here are more tips on how to avoid skimming.

Don’t be a social butterfly

So you’re on Facebook and one of your new friends asks where you grew up. It’s such an innocent question – but your answer can have dangerous consequences. Think about all those security questions you’ve been asked over the years, you know, the ones that are in place to safeguard your financial information. Take a look at a few sample questions we pulled from the Internet.

  • What was your childhood nickname?
  • What was the name of your high school mascot?
  • What school did you attend for sixth grade?
  • In what city does your nearest sibling live?
  • In what city or town was your first job?

Recognize any of these answers as something you might have posted on Facebook or LinkedIn? You might have just made it easy for crooks to figure out your high school mascot since your Facebook page lists the high school you attended. Yeah, not good. So while it might be fun to socialize, don’t post your life story on Facebook, not even in bits and pieces. Be smart about what you reveal on-line.

Hoard your receipts and statements

Raise your hand if you’ve ever misplaced a receipt. Or if you forgot to track your mileage to a destination. If you’re self-employed, these little mistakes can quickly add up to paying more on your taxes. Don’t let money slip through your fingers. With these apps for freelancers and entrepreneurs, it’s easier than ever to keep track of those pesky business expenses.

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Identity theft can happen to anyone

Most people think that something like identity theft won’t happen to them … until it does. Don’t be a dunce about your passwords and routinely change them. Don’t leave sensitive information on your laptop where it might be read by someone hacking your computer from your favorite Internet cafe. If you have a hard time remembering passwords, use a dedicated password memorization program. Try Dashlane, which works on a variety of platforms such as tablets, laptops and phones. Even better, it’s free!

If it sounds too good to be true…

Have you ever turned on the news and heard about someone who gave $5000 to a perfect stranger because they thought their child was in trouble? It’s hard to believe how gullible people are, but the cold hard truth is crooks are always coming up with new ways to fleece the unsuspecting public. The National Council on Aging posted their top ten phone scams targeting seniors. They include:

  • Health and Medicare Fraud
  • Funeral & Cemetery Scams
  • Prescription fraud.
  • Investment schemes.

Stay on top of the scams. Educate yourself on a regular basis.

Understand your credit score

We’re always taught not to compare ourselves to others, yet that’s exactly what happens when you’re assigned a credit score. Your previous credit history is being compared against other similar credit histories to determine if you’re a risk. According to myFICO, your credit score is based off the following:

  • 35% payment history
  • 30% on amount owed
  • 15% on the length of your credit history
  • 10% (each) on new credit accounts and the type of credit used.

Seek to improve that score by reducing the amount of debt you owe, and set up payment reminders so that you’re never late. If you think there might be a mistake with your score, or on your credit report, don’t let it linger–check it for accuracy. Look for a credit card that benefits you, and monitor your reports and score closely.. Be clever about your credit, not a chump.

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Use the right tools

These days it’s easier than ever to manage the pennies in your piggy bank. Money management tools like Mint and Manilla aid users in organizing their finances and tracking their expenses. No more wondering if you missed a payment, or worrying about your bank balance. These handy tools will list all your balances in one spot, and send you alerts if your checking account is low. A few of them will even let you know when your credit card rewards are about to expire! Don’t let money slip through your fingers. Let technology turn you into a financial wizard.

Improving your financial IQ isn’t difficult

Increasing your financial IQ doesn’t have to be tricky, it just takes time and an effort. You can tackle economics textbooks, study financial jargon, and go back to school for a degree in business. Or, you can be a money mastermind by staying informed, following advice from these finance experts, and by protecting yourself and your money.

  • Great tips! I especially like the security section. That’s something I hadn’t thought about when it comes to protecting your identity.

  • As with anything nowadays, if you have a question, someone else probably asked the same question! How to budget, how to meal plan, how to choose the best credit card… IMO, most of becoming money smart is just being willing to find answers, and not ignoring financial issues when they come up!

  • Audrey Henderson

    I have a meh-hate relationship with Facebook. On the one hand, I have re-established contact with long-lost friends, which is great. Facebook Pages also represent a tremendous potential opportunity for reaching large audiences. But I H-A-T-E the lax attitude Facebook seems to take toward privacy. Articles like this remind me that I am not paranoid about being cautious about posting on Facebook.