The past few years have been tough on Americans鈥� personal finances. Nearly struggle to live paycheck to paycheck, and only can afford a $1,000 emergency expense.

Many consumers want a proactive approach to get their finances on track, according to recent surveys by and . However, creating a strategy to get out of debt, break free from the paycheck-to-paycheck cycle, and build up financial fitness requires effort.

This is why the Financial Counseling Association of America (糖心原创vlog) offers debt-challenged families and individuals tools and resources to get financially fit. Think of the 糖心原创vlog and our members as your non-judgmental, experienced debt help coaches.

Just as choosing to live a healthier lifestyle through diet and exercise requires breaking bad habits and forming healthy ones, growing stronger in financial fitness requires doing the same. Below, our team defines financial fitness and offers five tips to help you get financially fit.

What is financial fitness?

Financial fitness describes your overall financial health, including the knowledge, skills, and habits that enable you to manage money well. It includes understanding income and expenses, budgeting and emergency funds, as well as saving for retirement and long-term goals.

People with good financial fitness or financial wellness also regularly review their finances, check their credit score, pay down credit card debt and set financial goals.听The goal of financial fitness is to have a healthy relationship with money.

Similar to creating physical fitness and nutrition plans if you鈥檙e trying to lose weight, financial fitness involves discipline, goal setting and regular check-ins to achieve results. To cut back on an excess of debt or to save for a dream vacation, plans must be made for how much income you can make and how it will be saved or spent.

Five tips to get financially fit

#1 Create a budget and stick to it

Take some time today to identify where your money comes from and what you spend it on. Whether written by hand or drafted in a Google doc or spreadsheet, having a list of your income and expenses is foundational.

鈥淐reate and personalize a percentage-based household spending plan to identify financial activities you are over or underfunding,鈥� says Todd R. Christensen, author and Housing and Education Manager at Debt Reduction Services.

If you need help figuring out what should be on your budget, try the 糖心原创vlog鈥檚 budgeting calculator, the Debt Freedom Tool. Or, contact an 糖心原创vlog counselor to talk through your thoughts and receive non-judgmental, expert advice.

Once you鈥檝e noted your monthly income and expenses, check to see if your expenses exceed your income. If they do, see what you can cut out.

Then track your spending each month to see if you are within your budget. When you stay within your budget, celebrate! Choose a pre-determined small treat (renting a movie or getting a coffee), not a spending binge.

#2 Set up automatic deposits for your emergency fund, retirement savings and short-term goals

Designate a portion of your paycheck to go directly into your savings and retirement accounts. If your employer pays you by direct deposit, this is easy to do automatically. With this simple practice, you鈥檙e more likely to save and less likely to be tempted to spend.

Taking small steps like this sets you up to succeed and can make a significant difference in your financial wellness.

Why do you need to save for emergencies and retirement? Because both will happen at some point. Those who are saving and investing will weather the challenges much better than people who have not saved.

鈥淭hinking you can go another year without an emergency fund is one of the biggest pitfalls I see,鈥� said Christensen. 鈥淚f you aren鈥檛 directly depositing something into savings, you will likely spend every penny you earn and end the year the same as last year.鈥�

A good rule of thumb for how much money to keep in your emergency fund is three to six months of living expenses. Emergency savings will protect you from debt if unexpected problems arise. If the water heater goes out or you have an unexpected car bill, you will have a cushion of protection. It also gives you flexibility if you lose your job or a loved one has an expensive medical event.

#3 Check your credit report each year

Review your credit reports each year 鈥� for free 鈥� at . With the prevalence of identity theft and the changing nature of people鈥檚 credit, it is important to know what is actually on your report.

If you find accounts or charges that are not yours, contact the creditor immediately to dispute the charges and close the account. If someone tried to steal your identity, . They will create a personalized recovery plan for you. (Click to read more about how to protect yourself from financial scams.)

Reviewing your credit report can also lead to positive surprises.

鈥淚 had a couple come in to review their credit report,鈥� Christensen said. 鈥淭hey came in with shoulders a little slumped and eyes cast down when they told me there would be things on their credit report that they weren鈥檛 proud of. As we reviewed their credit reports, we quickly realized the items they were afraid to see had already been removed due to the seven-year reporting limitation.鈥�

Christensen continued: 鈥淭his couple had intentionally avoided looking into purchasing a home because they assumed their credit rating was too low. As it turned out, they had very good credit. When they left, they had a bounce in their step. Two months later, I ran into them, and they told me they were about to close on their first home.鈥�

#4听 Reduce debts and think carefully before taking on more debt

Over time, credit card bills can snowball and overwhelm people without an emergency fund or a plan to pay off their debt.

Debt can cause significant stress and physical and mental ailments. It can also cause people to miss out on vacations, family time or a better quality of life.

鈥淥verwhelming consumer debt equates to major opportunity costs,鈥� said Christensen. Households that are using their entire current income to pay off past purchases will miss out on:

• Investing in retirement plans, making retirement years harder
• Saving for emergencies, causing stress when the inevitable emergency comes
• Creating memories through shared experiences (travel, gifts, etc.); no cushion in the budget leads to missed opportunities
• Advancing financial goals, like replacing a vehicle, upgrading appliances and furniture or providing for children鈥檚 college education

To cut back on debt, consider which services and purchases you can cut and be cautious about taking on long-term financial obligations.

鈥淎void contracting for a gym membership you will likely never use,鈥� Christensen advises. 鈥淚f you can鈥檛 get yourself to exercise at home (calisthenics, walking/jogging, etc.), you鈥檙e highly unlikely to sustain any habit of going to a gym. Plus, many gym contracts come with onerous terms that don鈥檛 permit you to get out of the membership without paying the entire annual contract.鈥�

Also, watch out for tempting sales and offers. 鈥淏uy-Now-Pay-Later purchases are specially designed to get consumers to buy more than they can afford,鈥� Christensen warns.

You can try to reduce your debt on your own by using the debt snowball or debt avalanche methods.

The debt snowball method encourages you to pay off the smallest debt you have first. Then use the extra money to pay off the next smallest debt and so on. This results in immediate progress and helps many people keep going on their debt repayment journey.

The debt avalanche method focuses on paying off the debt with the highest interest first. This method saves more money, but may take longer.

Other debt help strategies include debt management plans through a non-profit credit counseling agency (like 糖心原创vlog members), debt settlement or bankruptcy. Learn more about each here.

糖心原创vlog鈥檚 non-profit members offer a free consultation and affordable debt and credit counseling as part of their educational mission.

#5听 Set financial fitness goals

Regardless of your financial situation, planning for your financial future is wise. Just like you set goals to reach a number on the scale or fit into a special outfit, do the same to get financially fit! Set a goal to save for a vacation, a downpayment on a house or long-term retirement.

Consider opening an additional savings account at your bank, and start saving! Set up a direct deposit to help you commit to your goals. Ask about a high-interest savings account to make your money work harder.

When planning for a large expense, reframe your thinking. Instead of putting a large expense on a credit card or financing, can you cut back and save aggressively leading up to the purchase?

鈥淐ar payments, just because they鈥檙e the norm, are a big pitfall. Big car payments are about the fastest way to get a household into financial trouble,鈥� said Christensen.

鈥淭he typical car loan payments are now over $500 per month, but that doesn鈥檛 mean they鈥檙e a good idea. The average household transportation expenses (payment, insurance, gasoline) should not exceed 10 percent of household gross income.鈥�

Good financial fitness provides benefits

Developing and maintaining good financial fitness builds the strength to overcome temptation, discipline to save, and pride in your good habits.

Healthy financial fitness also builds good credit. Higher credit scores allow you to obtain lower interest rates on car, home or other loans.

Financial fitness also allows for greater generosity, flexibility and enjoyment of life through leisure time, travel, hobbies and more.

Need help getting started?

If you need help developing healthy financial fitness habits, contact one of our member agencies. 糖心原创vlog member agencies are experts in budgeting, debt and credit counseling, and debt management plans.听

Don鈥檛 struggle to build a budget or get out of debt on your own. Tap our trustworthy network of certified, non-profit members whose mission centers around helping people get out of debt, not making money at your expense. 糖心原创vlog an 糖心原创vlog member counselor today!

Editor鈥檚 Note: This article was originally published in January 2024 and was updated in April 2026 with more current information.

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Finances can be confusing. Debt and credit are two aspects of finances that most people deal with at some point in their lives. This article will help you understand what debt mix and a credit mix are and how that information can help you better manage your finances.

Understanding your debt mix and credit mix makes it easier to improve your credit score and opportunities for borrowing.听

What is a debt mix?

A personal debt mix refers to the amounts owed across different types of credit accounts, such as credit cards and car loans. Your debt mix focuses on how much debt you owe and to what type of accounts 鈥� either secured or unsecured loans.听

Secured debt is a loan or credit line that is backed by an asset, like a car or a home.听

Secured debt is safer for lenders because, if the borrower stops repaying, the lender can seize the asset. Mortgages and auto loans are examples of secured debt. This means if you stop paying your mortgage, since it is a secured debt, the lender can seize the asset 鈥� your house.听

鈥淪ecured loans are generally less risky for lenders, so consumers may have more lenient credit requirements, and their payment history on these loans may be weighed heavier when determining credit score impact,鈥� said , Senior Director of Enterprise Learning for MMI, an 糖心原创vlog member agency.

Unsecured debt is a credit line or loan that does not require an asset to borrow from the lender.听

Credit cards, student loans and personal loans are examples of unsecured debt. If you don鈥檛 pay your credit card balance, the lender will not seize your lunch or your new purse. However, paying late or not paying at all will result in late fees, a decline in credit score, debt collection and/or legal action.听

鈥淪tudent loans are unique because they are unsecured but are treated like secured debt in a scoring model,鈥� said , Director of Strategic Initiatives for American Financial Solutions, another 糖心原创vlog member. 鈥淭hey are evaluated primarily on payment history and the balance-to-loan ratio rather than revolving utilization.鈥�

What is a credit mix?

The types of credit accounts where you owe money make up a credit mix. In a credit mix, debt is classified as revolving or installment credit.听

Revolving credit accounts include credit card accounts and home equity lines of credit (HELOC). With revolving accounts, you can borrow varying amounts of money up to a certain limit each month. These accounts typically have no set end date.

Installment credit accounts have fixed payments to be made at set intervals (e.g., monthly) over a set timeframe.听

Having and repaying both revolving and installment debt shows lenders that you can manage different types of debt responsibly. According to , 鈥淎n ideal credit mix includes a variety of both revolving accounts and installment accounts.鈥澨�

One way lenders evaluate whether you have a good credit mix and debt mix is to look at your . A FICO score is a three-digit number calculated based on the information in your credit reports.

In a FICO score calculation, 35 percent is based on your payment history. 30 percent comes from amounts owed to lenders. The length of credit history makes up 15 percent of the score, and credit mix and new credit are 10 percent each.听

鈥淐redit scoring models also use an algorithm, so the impact of an action could vary by consumer,鈥� said Alderete.

How do you know if you have a healthy debt mix?

鈥淜nowing your and what it means is a good place to start,鈥� said Alderete.

To find your debt-to-income ratio, divide your total debt by your total gross income. Total debt includes housing, auto loans, credit cards and student loans. Gross income represents the amount of money you make before taxes and deductions.听

鈥淎 36 percent DTI ratio is generally considered reasonable,鈥� said Alderete, but it鈥檚 best to aim for an even lower ratio. A lower DTI indicates that you have a better balance of income to debt.

鈥淚t鈥檚 also important to consider the different types of debt you鈥檙e managing and how this contributes to your credit score and overall financial health,鈥� said Alderete. 鈥淵our ability to make regular fixed payments on secured loans, like a mortgage or auto loan, could indicate a lower borrowing risk, thereby weighing more heavily in what makes up that 10 percent of your FICO score.鈥�

Does how much unsecured credit you use affect your credit score?

Yes, the amount of your credit limits used on unsecured debt versus secured debt will impact your credit score.听

鈥淭he distinction between the debt types comes down to volatility versus predictability,鈥� said House.听

鈥淐redit utilization primarily tracks revolving debt like credit cards and revolving lines of credit. In a FICO credit score, this accounts for 30 percent of the score. Because people can spend, pay and re-borrow, scoring models view high balances as a red flag for financial over-extension.鈥�

However, House explained, installment loans, such as mortgages and auto loans, are fixed. They move in one direction 鈥� down 鈥� because balances drop as payments are made.听

鈥淪coring models view these as a sign of stability if payments are made on time. Basically, high utilization on a credit card signals a potential crisis, while a high balance on a new mortgage simply signals a new homeowner,鈥� she said.

Does unsecured debt hurt your credit score more than secured debt?

鈥淚t鈥檚 not that one type inherently hurts a credit score more,鈥� said House. 鈥淚t鈥檚 how the debt is used.鈥澨�

The composition of debt mix is important in credit score calculations. Balances on secured loans drop with every payment. The main factor being measured is payment history 鈥� the largest part of a credit score.

鈥淲ith unsecured, revolving credit 鈥� like credit cards 鈥� scores consider payment history and how much of the available credit is being used,鈥� said House. 鈥淗igh utilization can lower scores even when payments are made on time, making unsecured debt appear more harmful if balances stay high.鈥�

What hurts your credit score more 鈥� missing an unsecured credit card payment or a secured mortgage payment?

鈥淢issing payments on any type of debt will hurt payment history and cause a score to drop,鈥� said House. 鈥淟ate payments on mortgages and credit cards typically cause a significant decrease, which varies depending on the person鈥檚 starting score and their overall credit profile.鈥�

House said borrowers with higher starting scores may experience the largest credit score declines. Since their profile contained less negative or risky information before the missed payment, the event indicates the borrower has become riskier and alerts lenders.

鈥淢ortgage delinquencies often trigger sharper declines because housing payments are viewed as highly predictive of financial stability,鈥� said House.听

There is also the risk of foreclosure on a home or repossession of a vehicle, which can significantly damage a credit score.

If you cannot pay all of your bills, which should you pay first?

鈥淚f you鈥檙e unable to pay all of your bills, first assess your financial situation to determine your income and expenses. This puts you in the best position to plan, prioritize and negotiate,鈥� said Alderete.听

Then, contact your creditors and service providers to explain your situation and discuss your options. Many creditors have hardship programs available, and they want to help, she shared.听

Next, use all available resources to prioritize payments.听

鈥淐ompleting a 鈥榳ants versus needs鈥� assessment can help you determine which expenses are necessary,鈥� Alderete advised. 鈥淭ypically, these are expenses for things needed to survive, like rent or mortgage, groceries, transportation to and from work, etc.鈥澨�

Remember, any missed payment will likely impact your credit score. As you identify options, ask about the impact on your credit score. Also, always get agreements in writing and keep accurate records in case you need to contest fees later.

鈥�If you鈥檙e struggling to make payments or have a gap in your monthly budget, reach out to an 糖心原创vlog member right away,鈥� said Alderete. 鈥淚t鈥檚 never too soon to ask for help and explore your options.鈥�

How does medical debt affect your debt mix and credit score?

鈥淢edical debt is the most 鈥榝orgiven鈥� type of debt in the credit world because it is involuntary; no one chooses an emergency room visit,鈥� said House. 鈥淣ewer credit scoring models give less weight to medical bills because they are not a good predictor of how someone will pay their bills.鈥澨�

Recent legal updates also impact how medical bills appear on credit reports, House shared. These include:

• Removing paid medical bills from credit reports
• Requiring medical facilities and collection agencies to wait one year before reporting an unpaid medical bill to credit reporting agencies, providing time for insurance payments and for the person to explore other repayment options.
• Preventing medical debt under $500 from appearing on a credit report or score

How can a debt management plan help someone rebalance their debt mix?

A debt management plan (DMP) can help stabilize your finances in two ways, according to House.听

First, a debt management plan consolidates unsecured debts into a single structured payment.

Second, your credit counselor will work with your creditors to reduce interest rates on accounts. This allows more of each payment to go towards the principal of the debt, helping balances fall faster,鈥� said House.

Debt management plans also help rebuild payment history and immediately begin lowering balances.

鈥淓ven though a DMP doesn鈥檛 add new types of credit, it strengthens the two areas that matter most in someone鈥檚 existing mix: on鈥憈ime payments and lower revolving balances,鈥� said House. 鈥淥ver time, this leads to a credit file that looks more stable and less dependent on high鈥憆isk debt.鈥�

For example, American Financial Services鈥� client Krysta called in with a credit score of 645 and $80,300 in unsecured debt. After 15 months on a debt management plan, her score rose to 785, and she paid off $26,700.听

鈥淭his is a clear example of how improving payment history and reducing revolving balances can meaningfully shift someone鈥檚 overall debt mix and credit profile,鈥� said House.

糖心原创vlog an 糖心原创vlog non-profit credit counselor today to get help with your debt. Call 800-450-1794.

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Whether it鈥檚 expected or out of the blue, losing your job takes a toll 鈥� both emotionally and financially. As you wrestle with the changes that come with a job loss, financial uncertainty likely tops your list of concerns.听听

Fortunately, there are options for financial help after a job loss or layoff. 糖心原创vlog asked our member experts for their best advice on what to do after losing your job. Here, we share tips to protect your finances, prioritize your bills, find financial help and avoid common pitfalls after a job loss.听

Current job cuts and financial stressors

According to a recent , American companies cut more than one million jobs in 2025. This made the year one of the worst for job losses in decades.听

Trump鈥檚 tariffs, the government shutdown and layoffs also had a major impact on the U.S. economy and consumer finances.听

How can you protect your finances after a job loss or layoff?

鈥淭he first step is to stay calm and get organized,鈥� said April Lewis-Parks, Director of Education and Communications for Consolidated Credit. 鈥淛ob loss can feel devastating, but acting quickly and logically will help protect your finances.鈥�

File for unemployment or severance pay immediately

Immediately identify sources of income, such as unemployment or severance benefits, and apply for them.听

鈥淎pproval can take weeks, so apply as soon as possible,鈥� said Russell Graves, Executive Director for the National Foundation for Debt Management. 鈥淭hese benefits won鈥檛 replace your full income, but they provide a critical lifeline.鈥�

Next, assess your financial situation听

鈥淪tart by reviewing your essential monthly expenses 鈥� things like housing, food, utilities and transportation. Determine exactly how much you need to cover those basics each month, and then look for ways to reduce or defer costs where possible,鈥� said Lewis-Parks.

Identify how much cash you have available in your checking, savings and emergency fund. Then review your unemployment income and allocate funds to pay down essential bills first.听

Do not include your retirement savings in your initial assessment, experts advise. Tapping retirement accounts too early can trigger income taxes and penalties and set your retirement plan up to fail in the future.

Look for ways to maximize income

Consider short-term revenue opportunities, like delivery work or substitute teaching, that can be done while searching for a permanent position, advised Manuel Salazar, CEO of Take Charge America.

鈥淩emember, [finding a new job] usually takes at least a few weeks from application to employment in a well-paying job, so don鈥檛 wait to begin the job search process,鈥� said Salazar.听

Preserve as much cash as you can听

鈥淭hat means stopping all unnecessary spending and living on a crisis budget,鈥� said Salazar.

He recommends making drastic changes immediately, such as eliminating dining out, unnecessary car trips, and lottery tickets. 鈥淐ancel all subscriptions and say no to all solicitations. Whatever cash exists, and whatever credit exists, should be preserved.鈥�

Graves advised cutting back on extra debt payments and only paying minimums.

To best manage your cash, Graves said, 鈥淔ocus on essentials, track spending weekly, and use tools like budgeting apps or spreadsheets. Or, go old school and use a small notebook to jot down every time you spend money.鈥�

糖心原创vlog your creditors and service providers early

鈥淢any creditors, from mortgage companies to auto lenders to credit card companies, will work with customers to provide some relief,鈥� said Salazar.听

鈥淪ome may add a payment at the end of a loan and forgive an immediate payment. Some may temporarily lower interest rates. Many lenders have a defined hardship plan for consumers who lose a job.鈥�

The key is, you have to ask, added Graves.听

糖心原创vlog member credit counselors can provide guidance on working with your creditors. They can also help you find ways to best use your available resources and credit.听

What bills should you pay first?

When income is limited, prioritize the most essential bills first 鈥� those necessary for you to survive. If you lose your job, pay these bills first:

1. Housing 鈥� Stay current on your rent or mortgage if possible. Losing your home will make recovery much harder.
2. Utilities 鈥� Electricity, water and internet are necessities for daily life and job searching.
3. Food and healthcare 鈥� Maintain access to basic nutrition and necessary prescriptions.
4. Transportation 鈥� A vehicle or bus pass enables you to get to job interviews, part-time jobs and sources of aid, like food banks. Be aware, there are very few sources of assistance for car payments.听

鈥淭he next bill to be paid is the one with the greatest penalty for late payment 鈥� typically a credit card that did not agree to a temporary hardship plan or was not contacted in order to keep one card in a usable condition,鈥� advised Salazar.

鈥淚f the crisis lasts much longer than a month, bills should be paid on a rotating basis to avoid losing utilities and to prevent collection calls.鈥�

Where can you find financial help after a job loss?

Financial help for unemployed people is available. Our financial counseling experts suggest these resources:听听

• 鈥� This site will direct you to your state benefits, including SNAP, Medicaid, COBRA (for health insurance) and the Low Income Home Energy Assistance Program (LIHEAP) for energy bills.
• 鈥� This site connects people to local assistance programs, including food, housing and utilities.听
• 鈥� Military veterans may be eligible for VA programs and assistance. The National Veterans Financial Resource Center (FINVET) is one such resource.
• 鈥� If you are 62 or older but have not taken Social Security, consider drawing retirement benefits. Talk with a financial counselor about the pros and cons of this strategy.听听
• Financial Counseling Association of America 鈥� Our non-profit organization connects people to certified credit counselors who can help them map out next steps based on their income and debt level.
• Local nonprofits and credit unions 鈥� Search online to find programs in your state or local area. Many local programs offer emergency grants or temporary financial help.

How can you prevent falling into debt after a job loss?

No one wants to come out of a period of unemployment deeper in debt. These tips can help you reduce or avoid debt, despite the financial uncertainty.

• Manage your budget well. 鈥淩evisit your budget weekly and keep a close eye on your spending. Try to maintain enough savings to cover one month鈥檚 essentials while you search for new income,鈥� said Lewis-Parks.
• Find a side hustle. 鈥淧art-time work can help, as long as it doesn鈥檛 create more stress or cost money upfront,鈥� advised Lewis-Parks. Think about gig or freelance work that uses your existing skills. You could try delivery driving, tutoring, pet sitting or selling items online.听
• Keep your hands off your retirement savings. Tapping a 401(k) should be a last resort, according to Graves and Lewis-Parks. If you take early withdrawals, you鈥檒l likely face taxes and penalties. You may also lose future growth potential that could significantly hurt your retirement security.听
• Recognize the risks of personal loans. Personal loans can sometimes bridge a short gap, but they come with risks like high interest rates and credit score impacts if you fall behind on payments. 鈥淭aking on new debt without a steady income can dig a deeper hole. If you must borrow, keep it small and short-term, and compare lenders carefully,鈥� said Lewis-Parks.
• Take a mediocre job with benefits while you continue to search. 鈥淓ven if it isn鈥檛 a good job and even if it is minimum wage, having a job is good for morale and good for cash flow,鈥� said Salazar. 鈥淭hat doesn鈥檛 mean abandoning the real job search, but few people can go months without a paycheck and health insurance.鈥�

Financial pitfalls to avoid after losing a job

Losing a job can be traumatic, and different people react differently to the experience. To recover from a job loss, focus on what needs to happen, organize yourself and take positive steps forward.

鈥淭he biggest mistake is ignoring the problem,鈥� said Lewis-Parks. 鈥淢any people go into denial and keep spending as if nothing has changed, hoping to find another job quickly. That鈥檚 when credit card debt starts to spiral.鈥�

Ignoring bills and using credit to maintain your lifestyle will put you on a dangerous path.听

鈥淪ilence can lead to collections and credit damage, so communicate early. Creditors have in-house temporary programs to assist, with some offering no payment required for a period of time, and others requiring interest only,鈥� said Graves.

On the other hand, acting out of emotion with your finances can also sabotage your efforts. Avoid cashing out retirement accounts or maxing out credit cards. And don鈥檛 take on unnecessary new debt. High-interest loans or cash advances can quickly add up and trap you in debt.听

How a credit counselor can help after a job loss

鈥淟osing a job can feel overwhelming, especially when bills are mounting and the future feels uncertain. However, you鈥檙e not alone. There are steps you can take with a credit counselor right now to help stabilize your situation,鈥� said Graves.

糖心原创vlog member credit counselors can help you review your budget, identify immediate needs and find ways to cut expenses. Because of our existing relationships with creditors, we can easily help you find and access your creditors鈥� hardship programs.

Furthermore, 糖心原创vlog members have many resources to help unemployed people. Our members can help you identify unemployment benefits, local assistance programs, upskilling or reskilling programs and temporary work options.听

Connect with an 糖心原创vlog member credit counselor for help today. Start by clicking here.

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In this article, the Financial Counseling Association of America (糖心原创vlog) offers guidance on preparing for a disaster and accessing disaster recovery resources.

Disaster preparedness 鈥� the best defense is a good offense

鈥淭here are two flavors of disaster counseling 鈥� disaster assistance and disaster preparedness,鈥� explains Emanuel Rivero, vice president at Money Management International, an 糖心原创vlog member agency. People often overlook the preparedness aspect.

糖心原创vlog stresses the importance of having a family plan in case of emergency, and that means preparing for the worst and the unexpected. Many natural disasters involve loss of all communications 鈥� no cell lines, no land lines, no TV, no weather radar. You may find yourself with no way of knowing what is happening and no way to communicate with family, neighbors and community.

Planning ahead means going back to basics. Keep a battery radio and, if possible, a satellite device on hand. Keep an emergency reserve in cash, as banks, ATMs and credit card systems may be closed or offline.

Most people never expect to experience devastation from a natural disaster or other severe weather event. However, with climate-related emergencies on the rise across the country, it is wise to anticipate the types of events that could occur in your area. Whether you鈥檙e susceptible to hurricanes, wildfires, floods, earthquakes or tornadoes, being prepared in advance is the first important step.

Professional credit counselors encourage consumers to safeguard their homes, finances and personal well-being before a disaster strikes. Take these steps for disaster preparedness:听

Personal Safety

• Assemble an emergency supply kit with essential items: water, non-perishable foods, medications and first-aid supplies, flashlights, batteries and important documents. Get more tips on .听
• Plan for the special needs of any children, pets, elderly or individuals with disabilities.听
• Create a list of important contacts with contact information, including family members, neighbors, local emergency services and utility companies.
• Plan your evacuation routes in advance and discuss meeting places with family and friends.

Securing Your Home

• Consult with experts for recommendations on reinforcing your home to withstand disasters. This may include reinforcing roof connections and installing storm shutters over windows to protect against wind and rain. It may also involve clearing vegetation and selecting fire-resistant siding and roof materials in the event of wildfires.听
• Review your home or renter鈥檚 insurance to make sure you have adequate coverage and understand any exclusions for climate-related damage.
• Make sure your home is in your name and you have a copy of the deed showing a clear title. Some homes are passed down through generations with no clear proof of ownership. Having a so-called 鈥渢angled title鈥� can make it difficult to gain access to insurance money or grants for rebuilding after the disaster.
• Know how to turn off your gas, electricity and water in case of emergency.

Financial Safeguards

• Protect your important financial documents by storing copies in a secure, waterproof and fireproof location.
• Establish an emergency fund to cover unexpected expenses such as temporary housing and/or home repairs from weather or fire damage.
• Plan for potential disruptions to your income and employment.
• 糖心原创vlog a credit counselor for help getting your budget, debt and savings in a good place so you can withstand the financial impact of a natural disaster.

鈥淚t鈥檚 unrealistic for most people to have six months of living expenses tucked away in savings,鈥� says Rivero. 鈥淚n fact, many individuals have nothing in savings, and 50 percent of those who do have less than $750.鈥澨�

糖心原创vlog’s certified credit counselors can help individuals get out of debt and begin building an emergency fund. Counselors work with individuals to understand their financial situation, sometimes recommending a debt management plan (DMP) for those struggling to pay off debt.

A DMP structures monthly payments that are affordable and can actually help improve the person鈥檚 credit score over time. With a good credit score, individuals have more financial flexibility in the event of a disaster.

Getting help in the aftermath of a disaster

The (FEMA) has traditionally brought day-one assistance to individuals and communities in the event of a major disaster. FEMA workers are the first boots on the ground, providing financial and direct assistance to help with food, water, housing, repairs and other needs.

Furthermore, FEMA connects people with first responders and other support resources, like the American Red Cross. FEMA also maintains good relationships with credit counseling agencies (CCAs) across the United States, which can guide individuals in obtaining financial assistance and/or loan relief after a disaster strikes.

While this has traditionally been FEMA鈥檚 role, federal budget cuts may impact what the government agency will be able to do in the future. Therefore, it is critical to be aware of other organizations that offer disaster recovery assistance.听

Various agencies and other organizations offering disaster relief programs include: 听听

• Emergency response and recovery agencies in your state, county or municipality

Credit counselors step up in times of emergency

糖心原创vlog represents many CCAs that work with local and state governments to ensure that funding is available for inevitable climate disasters.听

鈥淲hile CCAs typically counsel consumers who are in trouble with credit card debt and other unsecured loans, many will shift their focus in the moment to help individuals in the aftermath of a disaster,鈥� according to Rivero. 鈥淲e understand that people need financial information to address their immediate needs. Discussions about debt accumulation can come later.鈥澨�

Linda Davis-Demas, vice president of Housing at BALANCE agrees. 鈥淎gencies are aware of the funding and programs that are out there. They also understand the process and can guide individuals on the right questions to ask their insurance company, finding access to assistance programs, and contacting their creditors for loan forbearance.鈥澨�

Housing counseling 鈥� a subspecialty of credit counseling

鈥淢any of our credit counseling agency members offer HUD-certified housing counseling,鈥� said Lori Pollack, executive director of the 糖心原创vlog.听

If the person鈥檚 home is uninhabitable following a disaster, counselors can assist in finding temporary or permanent alternative housing options. They may also be able to help individuals negotiate mortgage forbearance and explore options for refinancing or modifying their loan.

鈥淚t鈥檚 important to remember that everything goes very, very, very slowly when it comes to disaster assistance,鈥� said Russell Graves, executive director of the National Foundation for Debt Management, a member of 糖心原创vlog. 鈥淔ederal aid does not come for months or years, but local and state assistance can happen faster.鈥�

When to talk with a professional credit counselor

Non-profit credit counseling agencies offer personalized guidance to help clients rebuild their lives and achieve long-term financial stability. Whether it鈥檚 paying down debt and improving your credit score, budget planning to start an emergency savings fund or finding assistance after a disaster, the 糖心原创vlog can connect you with a counselor you can trust.听

The post Helping Families with Disaster Preparedness and Assistance appeared first on 糖心原创vlog.

The choices you and your child make about this simple piece of plastic are weighty. Getting a credit card early can build your child’s credit and their financial responsibility, but it also has significant risks.

What should you consider before you send your child to college with a credit card? And how can you prepare them for success?听

This article will discuss the pitfalls and benefits of credit cards for college students, important factors to consider and how to prepare your child to have a credit card.

Credit cards and college students

Building credit is the young adults give for opening a credit card.听听

According to data from , 85% of college students have a credit card. Just over half of those college-aged credit card users pay the full balance on their cards each month.听

However, a third of college students pay just the minimum balance or a bit more. Carrying a credit card balance is dangerous because it can quickly snowball into significant debt. The average credit card balance among college students is $2,088 (excluding $0 balance accounts).听

Below are some common college credit card pros and cons.

Credit pitfalls for inexperienced students

Young adults with a credit card typically lack financial literacy and guidelines for using credit, which can quickly get them into trouble.听

1. They don鈥檛 understand how credit cards work. Often, young adults struggle to understand how credit cards work and that they must repay the money they borrow.听
2. They don鈥檛 understand compounding interest and how quickly their small balance can grow if they miss payments or only pay the minimum balance.
3. They are not in the habit of budgeting or regularly paying bills.听
4. They give in to peer pressure. College students often feel tempted to overspend on dining out or to match the spending habits of others.听
5. They don鈥檛 understand the importance of safeguarding their credit card number. College students may have a false sense of security and leave their credit cards lying out in their rooms.

鈥淭he most common mistake we see is overspending,鈥� said Kim Cole, Community Engagement Manager for Navicore Solutions, an 糖心原创vlog credit counseling agency. 鈥淚ronically, many charges we see are the students taking their friends out for dinner or buying drinks for everyone at a local bar. They use the card as a social tool, and when the payment on the credit card comes due, they are not prepared to pay back what they charged.鈥�

Depending on the type of card your child has, their risky behavior or mistakes could affect your credit, too. It’s critical to ensure your child is ready for a card, has clear rules and expectations and understands how credit cards work.

Benefits of building credit in college

Sending your child to college with a credit card does have its benefits. Opening a credit card while in college can be easier for some young adults, and it lays the groundwork for building a positive credit history.听

A good credit score can help college grads as they rent an apartment, apply for jobs, refinance student loans or open other credit card accounts.听

Having a credit card in college can teach financial responsibility, budgeting and the importance of paying bills on time.听

Signs your student may be ready for a college credit card

Before your child took their first steps, you learned to see their progress and encourage them. Those same observational skills will help you recognize the signs that your child is ready to get their first credit card.

Look for your child to exhibit these capabilities:

• Maturity – Teens and young adults tend to be impulsive and make decisions based on emotions until their brains fully develop in their mid-20s. Exhibiting financially responsible behaviors, like paying back borrowed money or saving for a large purchase, are signs your child may be ready for a credit card.听听
• Ability to pay off credit card balance in full each month – 鈥淚n my home, I would not allow either of my children to have credit cards until they were over 18 and had the ability to pay back the amount they had charged on the credit card,鈥� shared Cole.
• Good understanding of financial literacy and how credit cards work – Your teen should regularly check their bank account, budget their money and demonstrate an understanding of how credit cards work.

Preparing your child to have a credit card

鈥淧arents should be teaching their children basic financial literacy before their teens get their first credit card,鈥� said Cole.听

Financial literacy is the knowledge, understanding and ability to manage one’s personal finances well. Parents teach financial literacy to their children by teaching them how to manage their money, save for a big item or event, open a bank account, and more.

鈥淭opics such as compound interest, credit reporting and scoring, and understanding how to establish a budget will give them a better understanding of how credit cards work,鈥� Cole said.听

鈥淭hey need to understand that when they charge items on a credit card, they will pay more for the item if they do not pay off the card in full each month. Young adults also need to understand the penalties for missing payments and the rewards that come with excellent credit.鈥�

Todd Christensen, Housing and Education Manager for Debt Reduction Services, recommends that young adults meet four financial responsibility guidelines before opening a credit card:

• Find and maintain a steady income for six to 12 months, expecting it to continue.
• Create and live by a budget for six to 12 months.
• Build a savings fund to cover one to two months of living expenses.
• Use a debit card for six to 12 months without any declined charges.

Read about more financial milestones for Gen Z.

Selecting the best credit card for your teen

When selecting the right credit option for your college student, you have a few options, including a secured credit card, a student-specific credit card or making your child an authorized user on your credit card.

A secured credit card is a type of card backed by a cash deposit provided by the cardholder, in this instance, you or your teen. The deposit is essentially collateral in case your child cannot make timely payments. The deposit becomes the credit limit. Secured credit cards typically have more fees, but people regularly use them to build their credit score.

A student-specific credit card is designed for young adults attending college, either full-time or part-time. No collateral or security deposit is required. Applicants without a credit history can apply for a student credit card. Some credit companies let college students transfer their credit cards to a regular account after graduation.

Adding your teen as an authorized user on your credit card gives them a card with their name on it that is linked to your account. If your child is responsible, this can be a good way to gradually give them more freedom. But it is important to remember that you are ultimately responsible for anything your teen charges.听

鈥淵ou can contact the credit card company and have them put a limit on the amount that can be charged, therefore guaranteeing that the student does not charge more than you are comfortable with,鈥� shared Cole.听

Setting appropriate limits for your child鈥檚 first credit card

Regardless of what type of credit card you choose, setting clear rules and expectations for how your child uses and takes care of the card is a must.听

鈥淔irst, a conversation should be had about what the college student should be charging on the credit card. If it is for emergency use only, define what an emergency looks like,鈥� said Cole.听

Then, outline clear spending limits, payment requirements and the consequences of misusing the card. Responsible use of credit is possible for college students, but they should start with a small credit limit and pay the bill in full each month.

According to Karen Carlson, Vice President of Education for InCharge Debt Solutions, if the student is paying the bill, the prerequisite needs to be a job. “The initial credit line should be small ($300 to $500), and the student should monitor their spending using technology (alerts from a budgeting application, for example),鈥� says Carlson.

鈥淚f a parent is paying the bill, then the student should be an authorized user on the parent鈥檚 account,鈥� she continued. 鈥淧arent and child should set expectations around acceptable monthly spending. Both should monitor weekly to make sure things don鈥檛 get out of hand.鈥�

听鈥淏eing responsible with credit means not only using the card wisely but also taking the proper precautions to prevent credit card theft,鈥� says Cole.

Cole urges parents to talk with their college students about protecting their credit card number, knowing where their card is at all times and not leaving it out in the open, even while in their dorm room.

Credit counselors are here to help

Sending your child off to college is a big step, and so is giving them access to credit cards. Before you say 鈥測es鈥� to a credit card for your college student, consider whether they are mature enough to handle credit card responsibility.听

Every day, the Financial Counseling Association of America helps people who have fallen into debt and need help to get back on their feet. Our nonprofit member agencies have certified counselors who listen without judgment and offer unbiased advice to help people create livable budgets, better understand their finances and overcome their debt.听

Carefully consider whether a college credit card is the right step for your college-bound student to prepare them for success. If we can help you or your child with free financial advice, don鈥檛 hesitate to call 800-450-1794.

The post A Parent’s Guide to College Credit Card Confidence appeared first on 糖心原创vlog.

Financial literacy describes a person鈥檚 knowledge, understanding and ability to manage their personal finances effectively. It includes budgeting, money management, paying off debt, growing their savings, investing and more.听听

Why does financial literacy matter?

Every day, you make choices about what to do with your money. If you don鈥檛 understand how to create a budget or manage finances, you are more likely to overspend, neglect your savings and fall into debt. High interest rates can cause this debt to snowball out of control and cause stress, instability and relationship problems.

Helping people learn how to manage their money wisely is a core part of the mission of the Financial Counseling Association of America (糖心原创vlog) and our non-profit members. We help people become more financially literate so they can be smart with their money, get out of debt and stay out of debt.听

鈥溙切脑磛log member agencies are focused on improving financial literacy nationwide because the ability to effectively manage money is a fundamental skill that everyone needs,鈥� said 糖心原创vlog President Martin Lynch. 鈥淥ur goal is to help people understand the basics of how to manage their money, helping them avoid financial problems while giving them the knowledge and confidence they need to handle any challenges that might come their way.鈥�

While many states do require financial education courses for high school graduation, evidence shows that these lessons are not enough to become financially aware and responsible. Currently, is at an all-time high of $1.21 trillion, and the is more than $105,000. More than a quarter of .听

Fortunately, through the efforts of the 糖心原创vlog and our members, thousands of people are gaining the skills they need to live financially healthy lives.听

Key aspects of financial literacy

Good financial education includes planning for both the expected and unexpected aspects of life. Some important financial literacy skills you should know include:

• Income and expenses – 鈥淚t鈥檚 important for your own financial well-being that you have a solid basic understanding of your income and expenses,鈥� said Lori Pollack, Executive Director of the 糖心原创vlog. 鈥淵ou should know how much money your household brings home and what expenses you must pay.鈥�

• How to use a bank account – Bank accounts provide a safe place to save money, deposit checks and pay bills. Different accounts work in different ways to help you achieve your goals.听听

• Budgeting – 鈥淎ll consumers should know how to create an accurate working budget and how to adjust that budget as their circumstances or goals change,鈥� said Lynch. 鈥淭hey should also know how to budget for specific goals, like buying or maintaining a home, taking a vacation and the ultimate 鈥� retirement.鈥�

• Understanding your credit report – 鈥淎ll consumers should understand how to read their own credit report and fix any mistakes they see, because there will be mistakes from time to time. They should also know the five elements of their credit score and how to avoid common mistakes and scams that will damage their score and waste their money,鈥� said Lynch.

• How to deal with a financial challenge – 鈥淲hether it results from a loss of income, an increase in expenses due to inflation, or any one of a thousand personal scenarios that can impact your family鈥檚 finances, you must know how to handle a financial challenge,鈥� said Lynch. 鈥淚f you understand the fundamentals of personal finance, you鈥檒l know how to evaluate your options in an emergency and make the best choices for yourself and your loved ones.鈥�

• How to create and maintain an emergency fund – Life has a way of throwing unexpected storms in our path that can have serious financial consequences. An emergency fund allows you to better weather the storms.听

Ways to become financially literate

Building a solid financial foundation isn鈥檛 as hard as you might think. 糖心原创vlog and our member agencies can help:听

Tap into free educational resources online

鈥淲e know that people are incredibly busy these days, but if you can find just 10 to 15 minutes a week, you can significantly improve your financial literacy through an 糖心原创vlog member鈥檚 website. Our members offer free budgeting tools and free articles on hundreds of topics,鈥� said Lynch.

Explore the wide variety of free community education programs available to help you and your family learn the basics of personal finance through 糖心原创vlog members or trustworthy organizations like Experian or TransUnion.听听听

Connect with a non-profit credit counselor

鈥淚f you鈥檙e not financially literate in today鈥檚 world, you can get into debt very quickly. Our counselors help people regain control of their finances, alleviating the stress that comes from trying to manage your money without fully understanding how the system works,鈥� said Lynch.听

Non-profit credit counseling agencies that are members of the 糖心原创vlog have an educational mission to advise people about money and debts. They are carefully vetted and certified to ensure consumers receive trustworthy, unbiased advice.听

糖心原创vlog member agencies provide one-on-one counseling and education to individuals at every income level, helping them overcome their challenges and reach their financial goals. And, you don鈥檛 need to wait for an emergency to talk to an 糖心原创vlog counselor or attend a seminar.听

鈥淚f you don鈥檛 see the information you need on their websites, our counselors will answer specific questions you have about your finances for free,鈥� Lynch shared.

Build a budget with a free budgeting calculator

鈥淲e can never say often enough how essential a budget is to a successful financially literate life,鈥� shared Pollack. 鈥淚f you don鈥檛 know where to start, the 糖心原创vlog has a free budget calculator that will allow you to quickly see where your hard-earned money is going.鈥�

Once you enter all the information, the budget calculator will give you feedback on how well you are doing with your debt repayments. After using 糖心原创vlog鈥檚 budget calculator, you can connect with a non-profit credit counselor for more help or use the budget you created to track your spending and manage debt.

Increase your financial literacy with 糖心原创vlog

Understanding your finances and how to make informed decisions about money is vitally important. With a solid understanding of financial concepts, you can build more financial stability and security.

Take advantage of free online resources or talk with a non-profit credit counselor to develop healthy financial skills like money management, budgeting, saving, investing and how to understand your credit report through free online resources.

By growing in your financial literacy, navigating financial decisions and reaching your financial goals will become easier, and you will be better prepared for any challenges that may come your way.

The post What is Financial Literacy and Why We Care appeared first on 糖心原创vlog.

As children transition into adults, they need financial tools and strong money management skills to thrive. So far, our nation has struggled to teach and embrace good financial literacy.

In this article, our non-profit credit counselors talk about Gen Z finances and how to help prepare your teens and young adults for financial success.

The importance of financial literacy for teens and young adults

In 2024, Americans carried . Today鈥檚 young adults continue to struggle with debt. Gen Z adults have, and almost .听

However, Gen Z’s strengths may allow them to learn from past generations’ mistakes.

鈥淕en Z is uniquely positioned to take control of their financial futures, thanks to their tech-savvy nature and access to endless resources,鈥� said April Lewis-Parks, Director of Education and Communications for Consolidated Credit.

Parents and teachers have an important role in educating Gen Z about personal finances.

鈥淚t鈥檚 never too late to teach kids healthy financial habits,鈥� said Todd Christensen, Housing Counseling and Education Manager for Debt Reduction Services, a member of 糖心原创vlog. 鈥淗aving discussions with youth long before they start earning money is best, which means fourth and fifth grade when they start mowing lawns, babysitting and shoveling snow for neighbors.鈥�

1) Teach about income, expenses and budgeting

Many Zoomers, born between 1997 and 2012, still live at home where parents can model and teach healthy financial habits. Sam Hohman, CEO of Credit Advisors Foundation, recommends beginning with simple conversations about day-to-day money decisions.听

鈥淐hildren learn their money habits in the home. The earlier and more often they are exposed to money concepts, the better their decision-making process will be,鈥� said Hohman. 鈥淭alk about how you make [financial] decisions by saying things like, 鈥榃e are trying to save for a house鈥� or 鈥業 always pay my bills on time.鈥欌��

A visual picture of where money goes each month is a powerful tool that stuck with Lori Pollack, Executive Director of the Financial Counseling Association of America.

She shared an example: 鈥淎 father took his salary for a month home in cash. He sat at the table with his family and showed them where the money went every month, laying out stacks of cash for car payments, food, gas, mortgage, telephone, cable, etc. When all the bills had been paid, he placed the remaining money into piles for savings, fun and giving.鈥澨�

Teach the reason for budgeting, not just how to budget. This helps teens develop good spending habits and stick to their budget and savings plan. If you aren鈥檛 sure how to develop a budget, adults can use 糖心原创vlog鈥檚 budgeting calculator. Teens can use this or try the 50-30-20 rule.听

鈥淭he 50-30-20 rule works well,鈥� explained Hohman. 鈥�50% of after-tax income can be used for needs such as housing, transportation and utilities. 30% goes to wants such as gym memberships or occasionally eating out, and 20% should be saved.鈥�

Learning about money doesn鈥檛 have to be complicated or boring, says Lewis-Parks.

“It starts with small, relatable lessons. Managing an allowance can teach kids how to divide their money into savings, spending and giving categories,鈥� said Lewis-Parks.

鈥淧arents can also encourage children to set financial goals, like saving up for a video game or a special outing. Activities like these create a foundation that makes financial management approachable and even enjoyable.鈥�

Teaching money management skills to Gen Z depends on what your child can understand at their stage in life.

鈥淔rom ages 10 to 14, parents can focus on teaching about needs versus wants, budgeting small amounts and learning to save money,鈥� said Lewis-Parks.听

By the teenage years, from ages 15 to 17, concepts like debt, interest and responsible credit use become more relevant. This is also the perfect time to introduce the idea of using financial apps to manage money.

“As young adults and college students, they will likely take on their first credit cards or student loan debt, making it essential for them to understand the consequences of carrying balances and the importance of paying bills on time,鈥� Lewis-Parks continued.

2) Open a bank account for your teen

A bank account is a vital tool for young people to learn to use in preparation for the future. According to Hohman, physically taking your child to a bank, introducing them to the tellers and having them make a deposit makes a huge impression. This simple step helps foster a trusting relationship for your child when they eventually need a car loan or mortgage.

Many people today use financial apps in place of or in addition to traditional banking. Financial apps can be helpful, but they do have some drawbacks to consider.

鈥淏anks offer a layer of security and reliability, including FDIC insurance that protects deposits up to $250,000, as well as the option to speak to someone in person for help with complex financial issues,鈥� said Lewis-Parks. 鈥淥n the other hand, digital apps cater to Gen Z鈥檚 desire for convenience and speed. These tools excel in offering automated budgeting, real-time notifications and investment features that simplify money management.鈥�

鈥淒igital apps may be easy and quick to use and to transfer funds between friends, but they lack safeguards that might keep Zoomers from losing money to a scammer,鈥� warned Christensen.

鈥淰enmo, Apple Pay, Paypal, Facebook Pay, etc., should all be treated like transferring cash. If you give money to someone accidentally, there鈥檚 no getting it back. Even Zelle, while tied to an FDIC insurance account, can be used to send money accidentally to an unintended recipient.鈥�

A smart Gen Z money tip is to build financial security with traditional bank accounts and use apps for daily money management.听

3) Help young adults establish good credit

Establishing good credit early can greatly benefit young adults鈥� financial lives. This usually starts with a low-limit credit card, which the parent usually oversees. Teach teens to pay their bills on time, the dangers of accumulating debt and how to avoid accruing credit card interest.

Is your teen responsible enough to have a credit card?

When should you consider credit cards for teens and young adults? Christensen encourages Gen Z young adults to meet four financial responsibility guidelines before opening a credit card:

• They must have a stable and steady income for six to 12 with the expectation that it will continue uninterrupted into the foreseeable future.
• They must create and live by a budget for six to 12 months.
• They must build a savings fund for the equivalent of one to two months of living expenses.
• They must use a debit card for six to 12 months without having a charge declined.

What kind of credit account is right for your teen?

鈥淧arents can add their teenagers as authorized users on credit cards, which allows them to build credit history in a low-risk way,鈥� said Lewis-Parks.

For those ready to manage credit independently, a secured credit card, where their own money acts as collateral, is a great starting point.

How do you prepare young adults to use credit?

Using credit effectively means young adults can borrow money, but they must think of their card as a small loan for a short time period. High-interest credit cards make carrying balances expensive. 糖心原创vlog experts recommend that everyone pay off their credit card debts in full each month.

For more information about credit scores, why they matter and how to build good credit, this 糖心原创vlog article can help.

4) Discuss the value of long-term financial planning

糖心原创vlog financial counselors emphasize the importance of budgeting, emergency funds and retirement planning. Teens and young adults should learn these skills early.听

Smart budgeting tips for teens include using the , setting up a direct deposit for paychecks and using financial apps to track spending and savings.听

Saving for long-term purchases or expected maintenance should also be part of your teen’s budget. Another part of their savings should be used to build up their emergency fund. Emergency funds protect people from falling into debt if they are out of work or have a medical emergency.

Christensen recommends that Gen Z young adults use direct deposit from their paychecks to build an emergency fund in a separate account.

鈥淪tart by saving one percent of your paycheck. Each month or two, work your way up one percentage point at a time until you鈥檙e saving 10 percent,鈥� he advises.

Gen Z must prioritize their retirement savings as well. Young adults have the time to use compounding interest in their favor with IRAs and 401K accounts. Every dollar saved can grow and create a solid financial future for your child.听

鈥淚f your employer offers a match on the 401k, participate immediately. Even if it is a tiny amount,鈥� urged Hohman. 鈥淭his builds the habit and will pay off huge dividends in the future.鈥澨�

Create good financial literacy for Gen Z teens and young adults

Through each stage of life, good financial literacy and habits pave the path to a strong financial future.

Parents of Gen Z teens and young adults have an opportunity to teach valuable lessons about finances. These lessons should cover how to create a budget and an emergency fund. They should also teach ways to get and maintain good credit. Finally, they should explain how to save for long-term goals.听

糖心原创vlog and our members work to encourage financial literacy and prevent young adults from falling into debt. Parents and teachers can learn more about Gen Z finances with these additional financial education resources:

The post Four Financial Milestones for Gen Z appeared first on 糖心原创vlog.

In this article, 糖心原创vlog member financial experts share seven ways to rebuild after bankruptcy.听

Consider the consequences before declaring bankruptcy

If you are considering bankruptcy, the 糖心原创vlog encourages you to exhaust all other options first. Bankruptcy is personally and financially challenging, and it should truly be a last resort.

Though bankruptcy restructures or discharges old debts, it has serious consequences. The consequences of bankruptcy are emotionally difficult for individuals and relationships.

Some consequences include a long-term impact on your credit report (seven to 10 years), a damaged credit score, potential limits on future financing, possible sale of personal assets and more.

鈥淏ankruptcy is the single most damaging item on your credit report,鈥� said Todd Christensen, Housing Counseling and Education Manager at Debt Reduction Services. 鈥淭ypically, you could lose about 35 percent of your credit score when a bankruptcy hits your credit report.鈥�

Before you choose bankruptcy, talk with an 糖心原创vlog credit counselor who is also certified by the U.S. Department of Trustees, encouraged Kim Cole, Community Engagement Manager at Navicore Solutions.听

There are two types of personal bankruptcy – Chapter 7 and Chapter 13. In Chapter 7 bankruptcy, your assets will be sold to pay off your debts. The bankruptcy remains on your credit report for up to 10 years. Chapter 13 bankruptcy is a 鈥渨age earners鈥� plan that requires you to pay creditors in three to five years. It remains on credit reports for up to seven years.听

Certified credit counselors can identify ways to avoid bankruptcy, and if bankruptcy is the best option, they can also provide required pre-bankruptcy counseling.听

Rebuilding after personal bankruptcy

After finalizing bankruptcy, many people want to work on their credit immediately. This is normal, but remember, rebuilding takes time, especially with bankruptcy on your record.听听

鈥淏ankruptcy is going to be [on your record, and it’s really going to hurt your finances, your credit report and credit score the first two years,鈥� said Christensen. 鈥淏ut the further in the past it goes, the less it hurts. So, start rebuilding 鈥� from early on.鈥�

鈥淕ive your credit report and score a chance to breathe,鈥� advised Cole. 鈥淭here are steps that should be taken prior to obtaining more debt.鈥�

Take the following steps to build back after bankruptcy.听

1 – Save your bankruptcy paperwork

Bankruptcy is a major financial event. Save your bankruptcy paperwork just like you would save other important financial papers, like a car title or home mortgage. Keeping your bankruptcy paperwork in a safe place can ease future purchases and even protect you if a creditor claims you owe them money.听听

2 – Identify what contributed to your bankruptcy

鈥�The leading reason people file bankruptcy is medical debt. This can result from repeated care or a medical emergency. For those without insurance, the cost can be crippling,鈥� said Cole.听

Other common reasons include job loss or income reduction, divorce, credit card debt, addiction and gambling.听

鈥淲e have so little personal savings in this country that any kind of job loss quickly turns into a major financial emergency,鈥� said Christensen.听

Look back at the choices leading to your personal bankruptcy. This information will give you valuable information for managing your finances in the future.听

鈥淚t is important that people truly identify what caused the need to file in the first place,鈥� said Cole. 鈥淲as it overspending and living beyond your needs or medical debt? Once that has been identified, rebuilding will be much easier.鈥�

Carefully consider what you could have done differently. If you need help reviewing your past and current finances or building a budget, a certified credit counselor can help.听听听听听

3 – Become and stay educated on your finances

鈥淣ever stop learning about how to manage your money, budgeting, credit building, getting out of and staying out of debt, banking and the like,鈥� urged Christensen. 鈥淪ign up for a free newsletter from an online finance program that you can identify with. Then work to overcome the negative.鈥�

鈥淚 suggest that all the adults in the home track their expenses. That requires writing down everything they are spending their money on,鈥� advised Cole. 鈥淭hen use that tracking to develop your budget.鈥�

糖心原创vlog members are non-profit organizations with educational missions. We strive to help Americans better manage their finances to get out and stay out of debt. Visit our Financial Advice page for articles that can help you learn and grow financially.听

4 – Make a plan to rebuild your credit

鈥淪tart with a secured credit card to help rebuild credit,鈥� said Cole. 鈥淢any of the major banks offer this type of card. You deposit a certain amount of money, and that becomes your credit limit. You use the card like any other credit card, and by making on-time monthly payments, your credit score will increase.鈥澨�

鈥淎fter a certain amount of time, the bank will either return your deposited amount plus interest, or they will apply it as a credit to your new credit card, which will no longer require collateral.鈥�

Stacking these secured cards over time can increase your credit score more quickly, according to Christensen.听

鈥淕et a secured card and put just one purchase on it a month 鈥� a cell phone bill or Netflix 鈥� just one purchase a month. Then, pay it all off in full every month,鈥� said Christensen. 鈥淎nd then after six months, get another card and do the exact same thing so you have two positive counts that you’re building credit with.鈥�

Another option is to become an authorized user on a family member鈥檚 credit card but do not use the card. Choose a family member who is trustworthy and pays off their credit cards each month.

A credit builder loan is another option for rebuilding credit, but carefully consider this before signing up. With this loan, the lender sets aside an amount of money, $1000 for example, in a savings account. You pay monthly installments toward that amount and receive the balance at the end of the loan term.

鈥淚 hesitate to recommend credit builder loans,鈥� said Christensen. 鈥淎 study showed that for people who have bad credit, including people who file for bankruptcy, these loans could actually make things worse because consumers don’t show a pattern of making on-time payments.鈥�

5 – Avoid scams and high-interest schemes

鈥淒o not respond to the junk mail you’re going to get after filing for bankruptcy,鈥� urged Christensen. 鈥淲ithin a week, you will get postcards saying, 鈥楬ey, come down and buy a car with no credit check so you can start rebuilding your credit.鈥欌��

These are actually predatory scams. Because bankruptcies are public information, predators obtain information from court reports and inundate recent bankruptcy filers.听听

鈥淲hat they don’t tell you upfront are two things: the price of the car, which is usually two or three times more than it’s actually worth, and the interest rate. So, don’t respond to that, as tempting as it might sound,鈥� advised Christensen.听

Protect yourself by learning more about other financial scams here.

6 – Begin budgeting and saving

Life is unpredictable, and unexpected expenses will arise. But there are expenses we know to expect, said Christensen. This is why budgeting and saving is so important.

For example, if you have a vehicle, eventually, it will need maintenance. This is something you should plan for and add to your budget.听

Emergency savings, a cache of six months of living expenses, should be reserved for an unexpected job loss, loss of income or other emergency. Saving for both expected expenses and unexpected expenses will set you on a solid financial path.听

If you need help determining how much you should be saving each month, 糖心原创vlog鈥檚 Debt Freedom Tool can help you build a realistic budget.听

7 – Be consistent

Taking your financial education seriously and sticking to a budget will pay off over time.听

鈥淲hen I was teaching classes in person for bankruptcy filers, I’d meet people out in the community who were able to purchase a home because they had built their credit score back up,鈥� shared Christensen. 鈥淎nd it was at a really decent interest rate.鈥�

Rebuilding after bankruptcy 鈥� get help from a credit counselor

鈥淐redit counseling agencies should be top of mind for anybody seeking good financial education,鈥� said Christensen.听

According to Cole: 鈥淐ertified credit and housing counselors take the time to review the situation. They work with the client to determine the monthly expenses and income and help the client establish a budget if they haven鈥檛 done so. Most non-profit credit counseling agencies charge low fees for fantastic financial counseling, education, recommendations and resources.

And, clients leave feeling helped, not judged, added Christensen.

鈥淏ankruptcy is not a badge of shame,鈥� emphasized Christensen. 鈥淧eople go through it for so many different reasons. Keep your head up. It is not the end of your financial world or your personal life.鈥�

If you need help rebuilding after bankruptcy, contact an 糖心原创vlog member credit counseling agency.

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