Build Strong Financial Credit
One of the most frustrating things about learning to manage money well is that it takes time. Each person learns through a process of trial and error. Unfortunately, credit seems to be one of the most painful lessons to learn. It doesn’t have to be.
It takes experience to gain experience. Whether you want to improve your professional skills, athletic abilities or personal credit, it takes practice and commitment. The more you do, the better you will be at it. Rather than avoiding the experience of building strong financial credit, keep an open mind and learn everything you can.
Your Character and Credibility
Financial credit is based on your personal financial choices. Every financial decision can either put you in a stronger position to leverage your assets or it can create a heavy burden that limits the options you have to work with. Building strong financial credit happens one day at a time.
Your financial character and credibility is a reflection of your financial reputation. It’s like a profile on social media with ratings, likes and reviews. It’s based on your past financial history: on-time payments, paid in full, or paid as agreed. Your financial reputation is also reflected in stability – completing training/certification, length of time earning a consistent income, and being connected to your community. Many of these work/life choices begin during our youth.
- Make decisions based on financial freedom and flexibility
- In the startup world founders focus on starting with the smallest version of their idea so their mistakes will be small and they can pivot quickly
- Start with one service you can offer, use what you have, then use your income to build slowly from there – whether it’s one course at a time, one newer piece of equipment at a time or one small contract at a time
- Give yourself clear benchmarks on big item purchases – know what you must have in place before making the investment in something that can break, lose value, wear out or get stolen
- Think about building your life in chapters – don’t attempt to jump ahead of your experience, financial capacity or support system too quickly
- Keep great records – major purchases, maintenance, contacts
Good Relationships are Worth Gold
The most valuable asset in life is a good relationship. School friends may be the ones that offer help on fixing a car, moving to a new place or they might know just the person that you need to talk to. Teachers, neighbors or co-workers will become references for jobs. There is only so much that each of us are capable of learning. We need each other to grow and thrive.
As you continue to build strong financial credit, remember to invest in healthy relationships. Find ways to connect or introduce people to collaborate and exchange ideas. Share your expertise. Be a mentor. Build your Social Capital. Strong healthy relationships contribute to strong financial credit by learning from the experience and expertise of people you trust.
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