Personal finances and money management are hot button issues for everyone in the current economy, but especially for millennials who are entering a job market and economic landscape that is arguably more volatile than ever before.

Setting up a budget, putting a plan together, and using some of the technology tools that are available are all common sense and practical items to put on your to-do list. Like most everything, however, there are always things that you might not be aware of, but that are equally as important as the obvious items.

And like watching the Warriors lose to the Lakers earlier this season, sometimes the unexpected can rear its head and make you start paying more attention. The better strategy is to plan ahead and try to stay ahead of these items that not everyone knows about.

Personal finances and money management are not, despite some claims to the contrary, inherently difficult or complicated to understand or put into practice. That said, it is important to remember that almost everything that people do can, in one way or another, effect their credit score, financial profile, and their ability to successfully manage their personal finances.

Now, not everyone is going to be effected the same way by these factors, nor is this list meant to be exhaustive. Rather, this should be a starting for you to think about and try to piece together what exactly is driving your financials situation. Things that you might not have ever thought of could be part of the reason why you are paying a certain interest rate, have to file certain paperwork, or have a difficult time getting that loan you applied for.

While these things might seem a bit unusual, it is important to remember that potential lenders and creditors look at your profile comprehensively, i.e. even the little things add up.

Taking a peek behind the money curtain

Not paying speeding tickets

Interviewing Ken Chaplin, senior vice president at Transunion, Dawn Papandrea discovered that driving related debt can have an impact on your credit score. When you think about it in the following way this unusual item begins to make more sense; any sort of debt avoidance or history of not paying your obligations on time makes you a higher risk for lenders and credit card companies. This also applies to unpaid toll charges and registration fees; those little items can add up quickly!

Closing unused credit cards

You might think that if you are not using a specific credit card, or do not use it very often, that closing it might be a safe way to help keep your credit score in check. Not so, according to Kimberly Rotter of Going into more detail, Kimberly outlines the concept of the debt utilization ratio, i.e. how much credit you are using versus the total amount of credit you have available. For example, if you have $5,000 of credit available, between two credit cards ($2,500 each), and use $1,000 on average during any given month you are utilizing 20%. If you close on the cards, however, your utilization rate jumps to 40% which likely results in a ding to your credit score.

Using debit when credit will do

Bethy Hardeman, of US News and World Report, points out the following situation that might trip up even some of the more financially savvy amongst us. When renting a car it is a common practice to put the charges on a credit card, but what if you are wary of handing out your credit cards with the recent spate of data identify thefts and corporate hacks? Using a debit card, which would be linked to a specific account (hopefully not your main one), might seem a like a good idea. If you go that route, however, that usually kicks off a hard credit check, which can have a negative impact on your credit score.

Checking your credit score too often

Jim Wang, at US News and World Report, discusses an issue that can seem a bit contradictory at times. While checking your credit score periodically is important, and everyone is entitled to one free credit report from each of the major credit bureaus, running your score too often, or asking a friend who happens to work in retail finance to check it for you, might ding your score.

It is clear that personal finances and your money management abilities are driven by a wide variety of factors that go far beyond whether or not you pay your credit card bills on time during the month. While those well-known and common sense items are essential for constructing a healthy financial profile and robust money management capability it is important that the other factors listed above are also taken into account.

Akin to how you need to use the right kind of oil in your car (or not fill up a diesel truck with gasoline) items that you might not see or even think about on a day to day basis can have dramatic effects on your money. Now that you have had a sneak peek behind the curtain, and have seen some of the more unusual items that can impact your finances you can do something about them. Knowing about, and being aware of the impact of items puts you a step ahead of most people, but that in and of itself is not enough.

Knowledge is great, but using that knowledge to improve yourself is the name of the game.

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Sean Stein Smith


Bergenfield, NJ

Dr. Sean Stein Smith, DBA, CPA, CGMA, CMA, CFE is a Financial Analyst - Joint Ventures, at Hackensack University Medical Center. Sean is a member of the Editorial Advisory Board of NJCPA Magazine, was selected as one of the NJCPAs "30 under 30" for 2015, and is an adjunct professor at both Fairleigh Dickinson University and Montclair State University. He is also serving his inaugural term on the AICPA's National Commission on Financial Literacy. When not writing, speaking, or teaching, Sean enjoys gardening, exercising, reading, pampering his dogs, and likes to do new/learn things whenever he can.

All posts by Sean Stein Smith

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