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.
