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Financial Skills That Everyone Should Learn

Would you like to be more confident about financial matters? It's relatively simple to build a repertoire of money-related skills quickly. The best news is that there's no need to earn a college degree in finance or accounting to get up to speed on subjects like real estate investing, creating a monthly budget, improving your credit scores, or preparing a personal income tax return. Here's a quick overview of the four most relevant financial skills for working adults in the 2020s.

Real Estate Investing

Investing in real estate is a time-tested and popular way to build long-term wealth. For individuals in all income brackets, property ownership can be a cornerstone of a retirement account, investment fund, or second stream of income. However, identifying and finding properties with solid financial potential can take time and effort. The main goal, after all, is to make money, not lose it.

That's why it's essential to do detailed research before making a purchase. Check out the neighborhood, recent growth rates, crime statistics, development projects in the works, and the capitalization rate. Those are just a sample of the many parameters that investors use to evaluate the potential profitability of a property. The capitalization rate, or cap rate, is a favorite for many. It is helpful to know how to figure out the rate, what it is, and when to use it to your benefit.

Making a Budget

There are a few specific steps for making a monthly personal budget. The first is to create a detailed list of all expenses and income sources. For most adults, the former is more challenging because the number of expenditures tends to be much greater than sources of income. After that, be diligent about tracking all your spending for one month. The exercise helps fine-tune expense estimates for discretionary spending on groceries, dining out, fuel, and more. Finally, if your income figure exceeds your total expenses, set that amount aside in a savings or investment account. If you are carrying credit card debt and need to take control of your debt in general, use the excess income to pay it down as soon as possible.

Improving Credit Scores

By law, the three major credit bureaus, Equifax, Experian, and TransUnion, must give all consumers one free report per year. Use your freebie to comb through the documents and find errors. They are more common than you might suspect. Contact any bureau in writing to make corrections, and be sure to document your arguments. The quickest way to boost scores is to pay the debt down, pay all bills on time, and not apply for new credit.

Paying Taxes

About half of all working people prepare their tax returns without outside help-- except for maybe a tax calculator. However, there's nothing wrong with hiring a trained accountant to prepare the document or check it for errors. Unless you have experience in the accounting field, it's wise to learn the basics of completing a return. When the task is complete, pay a modest fee to a tax accountant to make corrections. Then, file online or by mail well before the deadline. Use one of the popular software apps to prepare your annual tax documents.


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