During these tough economic times, many Americans have seen major downturns in their savings, their retirement accounts and cost of living.  So do you know where your money has gone?  Maybe it is time to check where your money is going.

The best way to do this is to start with your budget.  If you don’t use a budget maybe it is time to start.  Begin by making a money diary that will show your complete spending for at least two weeks.  It is better to do a money diary for one full month but two weeks will give you a pretty good understanding.  This money diary will help you know where your money is going.  Then you can build a budget that will help you pay all your bills, save a little money and maybe even have some fun.

Once you have your budget built then take the time to check out your debt.  Start with your revolving credit such as credit cards, department store cards and gasoline cards.  Most gasoline card require that you pay the balance in full at the end of the month.  But if you have a card that you carry a balance on make sure your balance due is at least 30% or below of your available credit.  If you have any card debt that is carrying more than 30% then you need to reduce that debt as quickly as possible.  Once your debt is below 30% your credit will begin to see improved credit scores.

Now you have a budget and you have reduced your revolving credit debt it is time to start building your savings or emergency fund.  You should have at least three to six months worth of living expenses in your fund.  If you have a two income family then your fund should reflect that amount.  No one expects you to have your fund overnight.  But you’ll want to build it up as quickly as you can.  Having this much money in savings will protect you from life’s little emergencies.

Finally, you should review your retirement account.  If you don’t have a retirement-plan then you should investigate getting one.  Many companies offer retirement plans and most will contribute those plans.  You’ll need to check out where your contributions are going.  If you had most of your contributions in the higher risk categories then you lost quite a bit of money recently.  Choosing a less risky option will take you longer to build a solid retirement account but odds are you won’t lose money as rapidly.

This will help you get on the right track financially.  Review your credit history report and dispute any inaccurate information.  Good credit is so vital in today’s economy so you should monitor your report at least once a year.  If you need additional help then look to hire a legitimate credit repair company.  Good credit repair companies will dispute as you instruct them to.  Good financial management begins with knowing where your money goes and maintaining good credit. 

If your parents taught you some basic money management skills then chances are you are properly handling your finances.  Simple things like budgeting, paying your debts on time and saving some money for a “rainy day” are basic money management skills.  Teaching your children at a young age is much easier than trying to teach them as teenagers.  Young children are easier than teenagers when it comes to money.

Begin by giving your children an allowance.  As they grow older teach them that their allowance is similar to having a job and getting paid by their employer.  Once your children are receiving an allowance, you can begin to teach them how to save money. Learning to save money to purchase the things that they want is a great habit to get into.  For example, if your child wants a video game, teach them save their money to buy the game.  You can even use this same example to teach your children about credit.  Offer to pay for the video game and allow your child to make payments from their allowance.  You can even set up a fee to make the loan similar to an interest payment.

You can even teach your children how the real world works.  Show what it’s like to have to pay daily living expenses.  You can even charge rent, utilities and other expenses so that your children can learn good financial habits.  By teaching your children how to save money and control their debt you are giving them a solid footing for their future.  Additionally, should teach your children as they approach the age of going out on their own about their credit report.  Show them how to get it, how to read it and finally, how to dispute any information that is inaccurate.  My daughter found errors on her credit report before she turned 18.  We disputed the information and got it corrected before she started out.

Good credit is hard to come by so teaching your children is very important.  Take the time to make sure they understand how important this is to their future.

There are some simple yet effective ways to help your credit score.  Once you have updated your credit report and got the report as accurate as possible then begin the following suggestions.

1.       Have a major credit card.  Gas cards and department store cards can help build your credit but without a major credit card you will have problems getting into the 700 plus scores.  Major credit cards include Visa, MasterCard, Discover and American Express.  If you don’t have a major credit card then you need to get one.  If your scores won’t qualify for a regular card then you need to look into a secured card.  A secured card will require a deposit into the issuing bank.  Verify that the bank and the card will report to all three credit bureaus.  Additionally, try to get a card that can be converted to a regular card after so many on time payments.

2.       Make payments for every credit card and loan on time.  The best way to confirm that is to make arrangements for automatic payments.  By setting up automatic payments you will never make a late payment again.  You also can setup automatic payments to take the amount you specify, either the minimum payment, a set dollar amount or the balance in full, every month from your checking account.

3.       Never let an account go to collections.  You dispute any amount on a bill then communicate with your creditor.  Because if you have an account that goes into collections you will have a negative mark on your credit report.  The best way to handle it is pay the account and take it to small claims court.  If you have accounts that go to collections and then become judgments against you will really hurt your credit score.  These may take up to seven years to no longer affect your credit score.

4.       Reduce your debt.  pay large portion of your credit score is based on how much of your available credit are you using.  The credit bureaus use a formula that likes to see large gaps between your available credit and your balances.  The scores will improve dramatically when you pay down your credit card debt.  So having a small balance on several cards better than a big balance on one card.

5.       Monitor your balance on your credit cards.  Even if you pay your cards off in full each month that may not be the balance being reported to the bureaus.  By monitoring your credit report you can determine on each credit card what number is being reported as your balance.  For example, if you have a credit card with a $10,000 limit and you charge $8,000 to the card then pay the complete balance in full, the credit card company may report your balance as $8,000.  This would show that you are using 80% of your available balance.

6.       Use less of your available credit for better scores.  Keeping your credit card balances below 30% is good for your credit score.  But getting your balance below 10% of your available credit will help you even more.  Using several cards is better than using one card for everything.  Additionally, make payments on your credit cards prior to their statement date.  Because this will lower your balance that is being reported to the credit bureaus.  You can also set up a automatic payment just before the due date to avoid any late fees.

These are just a few suggestions to help you improve your credit score. Having a good score is very important today with the current economy. Getting some help to correct your credit report can help you get on track more quickly. Don’t be afraid to hire someone to assist you in getting your credit report accurate. We can all have good credit if we want and work hard to do things properly.