Economy & Policy

6 Signs You’re Making All the Right Money Moves

You’ve worked hard to build up your savings, pay off your credit card bills, and boost your credit score. But how do you know that this hard work is paying off?

There are several ways to tell if you are making the right money moves that will help boost your financial security, secure the lowest interest rates on loans, and give you access to the best credit cards with the most generous rewards programs. Want validation that your money moves are the right ones? Look for these signs.

1. You’ve built an emergency fund

Emergencies constantly pop up: Your car’s transmission might blow. Your home’s furnace might conk out in the middle of winter. If you don’t have adequate savings, you might have to turn to high-interest rate credit cards to pay for these emergencies.

But you won’t have to do this if you’ve built an emergency fund. A fund stocked with plenty of cash is one sure sign that you’re making the right money moves.

Financial experts recommend that you have at least six months’ worth of daily living expenses saved in an emergency fund at all times. If you’ve met this goal, be proud: You’re doing something right financially.

2. You’re getting better credit card offers

It’s rare for a week to go by without some bank or credit union stuffing your mailbox with an application for a new credit card. But take a closer look at these applications. Has the quality of your credit card offers gone up? If so, that’s another sign that you’re making smart money moves.

If you’re saddled with tons of debt, or if you’ve made late payments or skipped payments entirely, your mailbox will be filled with offers for credit cards that come with high interest rates and no rewards — if you receive any credit card offers at all.

If, however, you’ve cut down your credit card debt and pay your bills on time each month, banks will send you applications for credit cards that come with generous rewards programs, enticing sign-up offers, and low interest rates. So watch your mailbox: If banks are trying to lure you to their plastic, you can bet that you’re becoming a savvy financial operator.

3. Lenders are happy to give you lower interest rates

Were you surprised when you were approved for an auto loan at the low interest rate your lender quoted? That’s another sign that you are making sound financial decisions.

Lenders check your credit reports and your FICO credit score before deciding what interest rate to assign to your mortgage, auto, student, and personal loans. If your credit score is high — 740 or more — you can expect to qualify for lower interest rates.

Your credit score is based on several factors, including your history of paying bills on time and your debt levels. If you have these financials under control, your score will be higher.

You can check your credit score — usually for a price of $15 by ordering it from one of the three national credit bureaus (TransUnion, Experian, and Equifax). Your credit card company might also provide your score for free each month. Just make sure it’s your actual FICO score and not an alternative version.

4. Your credit card debt has disappeared

Credit card debt is the worst type of debt you can have: The high interest rates that come with it mean that your debt load grows steadily each month that you carry a balance. If you open your credit card bill and you don’t have a balance, that’s one of the most positive signs that you are becoming financially mature.

5. The monthly bills don’t make you sweat

When you rip open the cable, utility, or gas bill each month, do you immediately wonder if you have enough money in your checking account to pay them on time? If you do, that’s a sign that you’re living paycheck to paycheck.

If, though, the monthly bills don’t make you cringe, and you always have enough money in your account to cover them, know that you’re doing something right with your finances.

6. Your checking account balance is growing each month

The goal is to make enough money so that you can pay your bills each month and have dollars leftover, money that you can invest or save. If you notice that you have more money in your checking account at the end of every month, be happy: That’s another sign that you’re making smart money decisions.