Do you know your future job depends on how you manage personal finance today?
A report from the National Association of Professional Background Screeners revealed that 25 percent HR professionals use financial checks when hiring for some positions. For example, you are applying new position in high-end merchandise. This position will likely use your money background to see whether you have stable financial or not. If you are financially stable, recruiter thinks that you will less likely to be tempted to pocket merchandise.
Other 6 percent of surveyed HR cited that they conducted personal credit background check to all applicants. HR managers think that personal financial affects greatly on performance. When employee has bad money management, their productivity decrease. They are also prone to be more stressful in workplace.
Another survey from Aol also revealed the same. Aol mentioned that money-related stress will affect your job performance with 72 percent of employees reported feeling stressed about money. Thus, it leads to perception that poor money management (credit) means poor employee. Therefore, it can be concluded that employer often checks your balance history to decide employment.
So, as you know that your personal credit history can determine your future career, you should start managing your money in the right way. To help you, you can follow these advices from Javier Castillo.
01 Create monthly or weekly budget
Money is one of essential parts of life. That being said, scheduling weekly or monthly expenses should be a must do in your financial management. It will help you see full transparency on your financial situation and thus manage your money better. Yet, before creating a budget, you first need to understand your expense and income.
02 Understand you expenses
Many people do not really care where they spend their dimes. They keep buying something they want to satisfy their present life. While this practice does not break the law, you should remember Warren Buffett saying, “If you buy things you do not need, soon you will have to sell things you need.” Therefore, it is better to know your priority expenses to create better budget.
For example, for a month, keep track of all your expenses. Take all the receipts and look at your bank statements. Remember to keep track of expenses paid by cash and credit. When you see the whole picture of your expenses, you should manage it smartly for next month whether you want to continue spending the same amount or not – whether it is necessary or just your greedy.
03 Know your income
Your job will give you fixed monthly salary. While you might receive more such as from bonuses, it is better to not include such additional income in your expenses. Advice is, just calculate your fixed salary to your expenses. Here are two ways on subtract your total income for a month. First, if you end up having negative number, it means you spend more than you made. Thus, you need to reduce your spending and expenses. Second, if you end up with positive number, congratulations for spending less than what you earn. This way, you can increase your debt payment or your savings.
04 Consolidate your debt
If you do not have any debt to pay, you can continue to the next step. However, if you do, consider to pay them regularly. Proper step to control your debt payment is by combining all the bill into one rather than pay them individually. Calculate all the money you need to pay in one month. Likewise, when you are on tight budget, pay your debt at least minimum amount. Advice is, you should keep the paying cycle going until your debt if fully paid off. When it is done, consider to not repeat the same mistake.
05 Create an emergency fund
Unexpected things happen and it is better to be prepared. Emergency funds are an important part of healthy personal finance plan, said Castillo. Creating separate budget for emergency fund is the best move. Unlike retirement money, emergency fund is like saving money but you can take it when necessary.
06 10 to 15 percent for retirement
Early retirement plan is a must as you will not work till a very old age. You can have your own retirement plan. Advice is, to save 10 to 15 percent of your monthly budget and do not use it for urgent things as you already have emergency fund. The best ways is to double your retirement money by investing it.
07 Review your credit report
Your credit report is important because it can determine how creditworthy you are. In employment, if your credit report looks a mess, recruiter will think that you are one of poor “money management” employee.
So, it is vital to assure you have all updated information about your credit history. If your aim is a good credit score, keep your spending low and work on paying off your debt.
08 Use tool for your personal finance management
You might already have monthly budgeting plan in your note book, but it is not efficient enough. Try to use tools for your personal finance assistance. Informative tools such as MoneyStrands or Quicken will help you to manage your money more efficiently and effectively.
09 Follow money management resources
The best move is to always increase your knowledge on finance management. There are many resources you can get offline or online. You should choose some that suit your finance condition and practice it. Remember that, managing your financial effectively will not only give your brighter employment prospect, but will make your life flow much more smoothly, Castillo said.
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