One of the biggest wonders of the vast majority of Americans is how to improve their personal finances and make their bank accounts and trade lines happier and healthier. So, in an attempt to answer these questions, it might not be a bad idea to look at the lifespan of the bank accounts, tradelines, and credit of someone with healthy, stable finances.
The healthy tradeline actually starts in college. The smart student has has a job in high school, carefully saving up for college so that they don’t have to take out an exorbitant amount of student loans. However, the student waits before getting a credit card until they are in college, and then they take out a credit card that will help them the most by offering the most cash back for academic purchases and groceries more than anything else. While also in college, the student doesn’t take out any unnecessary student loans, instead just taking what they need so as not to accumulate any extra debt or extra interest. They hold off on large purchases until after they graduate, only taking out a small loan here or there when absolutely necessary and helping their credit score improve in the process.
After the smart student graduates and becomes the smart young adult, they use the good credit that they established in college to make some of their larger purchases. They continue the good practice of paying all of their balances in full and on time so as not to accrue any unnecessary interest and so as to make that portion of their FICO score a strong, steady percentage. They take out multiple types of loans so that they prove themselves capable of handling multiple types of credit to the three major credit bureaus, who in turn boost their scores. They start setting aside money for retirement while they are in their twenties so as not to end up like the large portion of America who regrets not saving for retirement sooner and so that they can have the retirement that they have always wanted rather than having to settle because they didn’t financially plan when they were young like they should have.
Once they are older, they are grateful that they kept their stock portfolio diverse and that they took the risks that they did when they were younger. Now, they supplement their portfolio with stocks that they know will pay off, slowly but steadily helping them earn a bit of passive income. Their long-term loans are starting to be paid in full and now they own their homes or cars, or maybe they have finally paid off their student loans. If they get themselves into credit card debt, it’s never for very long because they responsibly take out a debt consolidation loan or take on a side job so that they can quickly and easily pay their debts.
The smart student is now also made wise by the years of retirement, which they steadily saved up for ever since they had graduated college. It is peaceful knowing that they are secure in their finances, with maybe a little bit of extra income coming in from the odd job or the passive income of a secure stock. Their credit card debt is perfectly manageable and they have always paid on time and in full, so their credit card company never has to adjust their rate or give them unnecessary fines.
Although personal finances can look more individualized, this is a good example to follow with your own finances. After seeing this example, you might see some necessary adjustments to make in order to have the stable financial future that you deserve.