More Americans are using these loans, especially younger adults and families with young children. Nearly a third of Buy Now Pay Later users have used the service to pay for necessities like groceries and utilities.

Many choose BNPL loans because they are easy to get, easy to use and easy on the wallet at the time. But the risks of relying on BNPL make life anything but easy.����

The risks of Buy Now Pay Later are real and significant. These risks include unsustainable spending habits, unexpected debt accumulation, difficulty budgeting and losing track of multiple payments. Each of these factors can harm your finances, affect your credit score and lead to late fees or penalties.����

This article will reveal how Buy Now Pay Later works, the risks of using and relying on it and how �鶹��Ƶ member counselors can help if you’ve gotten in over your head.��

What is Buy Now Pay Later and how does it work?

“Buy Now Pay Later lets you split a purchase into smaller payments over time, most commonly over four equal, [bi-weekly] payments, including the first one at the point of sale,” said Todd Christensen, Housing Counseling and Education Manager for Debt Reduction Services, an �鶹��Ƶ member. “These are touted as interest-free if you make timely payments.”

While some extended installment plans operate like a traditional personal loan with fixed monthly due dates, standard signature “pay in 4” setups are different. These short-term installments are due at two-week intervals, meaning the entire balance is typically paid off in six weeks.

At the point of sale in a store or online, consumers select BNPL as their payment option. Then, they select their repayment option, and the lender performs a soft credit check.

For a standard “pay in 4” plan, the first installment is charged immediately at checkout. For longer-term installment options, the first payment is generally due 30 days after the purchase.

The most popular Buy Now Pay Later apps and loan providers include Affirm, Klarna, AfterPay and PayPal.��

How do Buy Now Pay Later lenders profit?

Fintech companies and BNPL providers primarily make money from merchants who pay them merchant fees for each related transaction or for advertising their products.

Other sources of revenue include debit card interchange fees, late fees, subscription services and income generated from longer-term financing options that charge interest.

Is using BNPL a life hack or unsustainable strategy?

Today, some consumers use BNPL as a survival tool for essential expenses. With the option to break larger sums into smaller bills without interest, it can sound like a great option. But is it?

The real issue is whether consumers use BNPL strategically or as a survival tool, said Kim Cole, Community Engagement Manager at Navicore Solutions, an �鶹��Ƶ member.��

“Buy Now Pay Later can be a useful short-term tool for managing an unexpected cash-flow gap, particularly when the financing is interest-free and the consumer has a clear plan for repayment,” said Cole.��

“A one-time bridge because payday is a few days away is very different from someone relying on Buy Now Pay Later every month for necessary expenses such as groceries or to keep the lights on; the latter is a warning sign,” said Anissa Schultz, Director of Enrollment and Client Services at Credit Advisors Foundation, an �鶹��Ƶ member.

When multiple payments stack up, consumers must use next month’s income to pay for last month’s necessities. That’s not a long-term solution or a life hack, said Schultz. It’s usually a sign that the budget simply isn’t working anymore.

The risks of using BNPL

According to Schultz, the biggest risk in using Buy Now Pay Later is how it makes spending feel smaller than it is. This can lead to unsustainable spending habits that rack up debt.

“Four payments of $25 doesn’t feel as painful as one payment of $100, even though it’s the same purchase. As such, people tend to minimize the impact to their budget and spend more than they should,” said Schultz.��

Using BNPL for necessities can turn a short-term cash-flow problem into a longer-term debt cycle, said Cole. “Groceries are consumed quickly and utility bills come every month, but the payments for those expenses can continue for weeks or months. Consumers may find themselves making payments on yesterday’s necessities while borrowing again to cover today’s [expenses],” said Cole.

BNPL borrowers often have multiple active loans at the same time. This can cause confusion about what bills are due when and for how much.��

“Missed payments, overdraft fees, late fees and eventually collection activity can follow,” said Schultz. ”People continue using Buy Now Pay Later because they’re trying to keep cash in their checking account for other bills, which only pushes the financial problem further down the road.”

BNPL also makes budgeting a challenge. Multiple plans and payments make it hard to see how much future income is already committed, emphasized Cole. The debt can feel almost invisible until several payments come due at the same time.��

“Individually, payments may seem small and manageable, but collectively they can strain a household budget and increase the risk of missed payments, overdrafts, late fees or other financial consequences,” said Cole.

Regular BNPL use for necessities means your budget isn’t working

�鶹��Ƶ member counselors report that more than half of the people who contact their agencies are struggling due to rising costs of housing, insurance, groceries, utilities and other essentials.

If you often use BNPL plans for groceries, utilities or other essential bills, you may have a cash-flow issue. This means your expenses have grown, or an emergency has occurred, but your income has not kept pace to offset the bills.

How to get out of Buy Now Pay Later debt

If your budget isn’t working, take a broad look at your full financial picture. This includes all income, assets, expenses, debts and other financial obligations.

�鶹��Ƶ member counselors recommend building a realistic budget as a foundational tool to break this cycle. This includes accounting for income, essential expenses and every outstanding debt obligation, including BNPL payments, said Cole.

“From there, counselors work with consumers to identify opportunities to reduce expenses or adjust spending so they can regain control of their cash flow,” said Cole. “One of the challenges with Buy Now Pay Later is that consumers may not initially think of these purchases as traditional debt. Simply putting all the payments in one place can be eye-opening and is often an important first step toward breaking the cycle.”

“Sometimes a debt management program can lower interest rates on credit card debt, creating breathing room in the monthly budget,” said Schultz.��

A debt management plan consolidates unsecured debt into a structured repayment plan with one lower monthly payment, lower interest rates and fees. Debt management plans are offered exclusively by credit counseling agencies. Agencies are carefully monitored by the government and must meet stringent criteria to qualify as an �鶹��Ƶ member.

Credit counseling can also help address the behavior behind repeated BNPL use.��

If you are regularly using installment loans to pay for basic necessities, the underlying budget shortfall indicates a need for greater financial stability. �鶹��Ƶ member counselors can help you untangle the numbers, build a working budget and explore your debt relief options.

Connect with a certified counselor by calling 800-450-1794 or clicking here to submit a request.����

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1. LendingTree:

2. Federal Reserve Board:

3. Congressional Research Service:

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The most financially distressed states

The financial health of a U.S. state is made up of the financial wellness of its residents. If a majority of the population delays or misses debt payments, has changes in credit scores or has growing bankruptcy claims, it indicates that the state is financially distressed.

measuring the number of state residents in financial distress. This study painted a picture of economic trends in each state and the residents’ overall financial health.

The study examined factors including bankruptcy rates, credit scores, and “debt” search volume. According to the analysis, the top 10 most financially distressed states are:

Texas

Texas has one of the highest rates of consumer debt in the nation. On average, Texans have . Texans also have the fourth-highest credit card delinquency rate in the nation, at 14.2%.��

Texas had the third-highest number of bankruptcies nationally, along with a high search volume for loans and debt help.

Florida

As one of the nation’s fastest-growing states, Florida residents struggle with affordability and financial stress.��

Floridians carry an average of $9,184 in credit card balances per user. Florida has the second-highest credit card delinquency rate at 14.9% and the .

On average, housing costs are higher due to the influx of new residents, and home insurance costs are double the national average. The recently rose by 14%, making Florida a top state for foreclosures in the nation.

Louisiana

Louisiana has the second-highest personal debt burden in the nation, . The state ranks among the top three poorest states in the U.S. with a poverty rate of 17.4%.��

Louisiana is also the . It also has the after 90 days and the highest average number of accounts in distress. Student loan delinquency rates are also among the highest.��

The average credit card debt in Louisiana is $7,015 per user. Louisiana has the third-highest credit card delinquency rate at 14.2%. Additionally, Louisianans have the second-lowest at just 686.��

Louisiana residents log some of the highest numbers of Google searches for loan-related queries, highlighting residents’ concerns about personal finances.

Nevada

Nevada leads the nation in average credit card delinquency, at 16.3% – four points higher than the national average. Nevadans have an average credit card debt of $8,381 per resident.

Residents also have the ninth lowest credit scores in the nation. Foreclosures have continued to grow rapidly year over year. Nevadans are also the fourth most frequent bankruptcy filers per capita in the U.S.

South Carolina

South Carolina ranks second-highest in the number of residents with accounts in distress. About 40% of the population falls below the (Asset Limited, Income Constrained, Employed), making affordability a significant issue.

The average credit card debt per user in South Carolina is $6,706. The credit card delinquency rate is the 10th highest in the nation at 13.4%. The average FICO score of South Carolinians is 699.��

South Carolina is also sixth in the nation for debt delinquency.

Oklahoma

The average credit card debt per Oklahoma resident is $6,601, and the average credit card delinquency is 13.3%. More than 42% of Oklahoma residents fall under the ALICE Threshold, meaning they struggle to afford basic living expenses.

The average Oklahoman credit bureau score falls at 695 – tied with Texas for the fourth-lowest score. Oklahoma residents rank among the top five states searching for information about debt help and loans.��

North Carolina

North Carolinians rank high on the list for people with accounts in distress. Average credit card debt per user is $7,487, and the credit card delinquency rate is 12.5%. The average credit score for N.C. residents is 706.

North Carolina ranks eighth in the nation for delinquent debt payments. The lingering effects of Hurricane Helene, including damage to both properties and the economy, have continued to place stress on the state.��

Mississippi

Mississippi leads the nation in delinquent debt payments and has one of the lowest average credit scores at 676. It also ranks second in the nation for bankruptcy filings. Mississippi is considered the poorest state in the U.S. with a poverty rate of 18.8%.

. The average credit card debt is $6,146, and the delinquency rate is 13.4%. Mississippi has the highest percentage of households without bank accounts. It also has some of the lowest rates of sustainable spending habits and emergency savings among residents.

Kentucky

Kentucky is home to one of the nation’s highest poverty rates, ranking alongside Mississippi and Louisiana. It also has , according to WalletHub.

Average credit card debt per user in Kentucky is $5,908, and the credit card delinquency rate is 11.8%. Kentucky residents have an average credit score of 704. The state has the sixth highest number of bankruptcy filings in the nation.��

Alabama

Alabama firmly ranks among the top five poorest states in the U.S., with a poverty rate of 16.1%. It has the fourth highest number of bankruptcy filings in the nation.

The average credit card debt among Alabama residents is $6,619, and the average credit card delinquency rate is 12.2%. The average credit score is 691. Alabama residents rank fifth in the nation for delinquency on debt repayment.

Despite being an affordable place to live, Alabama residents struggle with low wages and the cost of basic necessities.��

The debt-versus-wealth paradox

Interestingly, when comparing debt by state, the states with the highest total outstanding balances are often wealthy, high-cost-of-living areas. This includes states like California, New York, Washington, Massachusetts and Maryland.

High mortgages and steep living costs drive these numbers. However, high incomes shield these residents from severe financial distress. They maintain strong credit scores and low default rates, according to the WalletHub study.

Conversely, the most financially distressed states face different economic struggles. Residents there hold lower average debt balances overall. Yet, they suffer from high delinquency and default rates. They also experience surging bankruptcy filings and lower credit scores.

How the �鶹��Ƶ can help with overwhelming debt

Credit card delinquencies have hit an all-time high. Personal savings rates have fallen to a two-decade low. Despite these harsh economic realities, the Financial Counseling Association of America (�鶹��Ƶ) can help.

Our member agencies work with consumers across all 50 states. We hear personal stories of distress firsthand every day.

If you are struggling with overwhelming debt, reach out to the �鶹��Ƶ. We will connect you with a trustworthy credit counseling agency that provides high-quality debt and budgeting assistance. Our members meet these stringent requirements:

• Certify all financial counselors
• Maintain non-profit status
• Achieve independent, third-party accreditation
• Meet annual licensing and compliance requirements in their service states

When you contact the �鶹��Ƶ, we will connect you to a counselor to help with your unique financial situation. Our agencies do not provide loans or grants. Instead, your counselor’s goal is to help you build a realistic debt repayment plan. �鶹��Ƶ us to find a counselor today.

The post The Nation’s Most Financially Distressed States appeared first on �鶹��Ƶ.

The past few years have been tough on Americans’ personal finances. Nearly struggle to live paycheck to paycheck, and only can afford a $1,000 emergency expense.

Many consumers want a proactive approach to get their finances on track, according to recent surveys by and . However, creating a strategy to get out of debt, break free from the paycheck-to-paycheck cycle, and build up financial fitness requires effort.

This is why the Financial Counseling Association of America (�鶹��Ƶ) offers debt-challenged families and individuals tools and resources to get financially fit. Think of the �鶹��Ƶ and our members as your non-judgmental, experienced debt help coaches.

Just as choosing to live a healthier lifestyle through diet and exercise requires breaking bad habits and forming healthy ones, growing stronger in financial fitness requires doing the same. Below, our team defines financial fitness and offers five tips to help you get financially fit.

What is financial fitness?

Financial fitness describes your overall financial health, including the knowledge, skills, and habits that enable you to manage money well. It includes understanding income and expenses, budgeting and emergency funds, as well as saving for retirement and long-term goals.

People with good financial fitness or financial wellness also regularly review their finances, check their credit score, pay down credit card debt and set financial goals.��The goal of financial fitness is to have a healthy relationship with money.

Similar to creating physical fitness and nutrition plans if you’re trying to lose weight, financial fitness involves discipline, goal setting and regular check-ins to achieve results. To cut back on an excess of debt or to save for a dream vacation, plans must be made for how much income you can make and how it will be saved or spent.

Five tips to get financially fit

#1 Create a budget and stick to it

Take some time today to identify where your money comes from and what you spend it on. Whether written by hand or drafted in a Google doc or spreadsheet, having a list of your income and expenses is foundational.

“Create and personalize a percentage-based household spending plan to identify financial activities you are over or underfunding,” says Todd R. Christensen, author and Housing and Education Manager at Debt Reduction Services.

If you need help figuring out what should be on your budget, try the �鶹��Ƶ’s budgeting calculator, the Debt Freedom Tool. Or, contact an �鶹��Ƶ counselor to talk through your thoughts and receive non-judgmental, expert advice.

Once you’ve noted your monthly income and expenses, check to see if your expenses exceed your income. If they do, see what you can cut out.

Then track your spending each month to see if you are within your budget. When you stay within your budget, celebrate! Choose a pre-determined small treat (renting a movie or getting a coffee), not a spending binge.

#2 Set up automatic deposits for your emergency fund, retirement savings and short-term goals

Designate a portion of your paycheck to go directly into your savings and retirement accounts. If your employer pays you by direct deposit, this is easy to do automatically. With this simple practice, you’re more likely to save and less likely to be tempted to spend.

Taking small steps like this sets you up to succeed and can make a significant difference in your financial wellness.

Why do you need to save for emergencies and retirement? Because both will happen at some point. Those who are saving and investing will weather the challenges much better than people who have not saved.

“Thinking you can go another year without an emergency fund is one of the biggest pitfalls I see,” said Christensen. “If you aren’t directly depositing something into savings, you will likely spend every penny you earn and end the year the same as last year.”

A good rule of thumb for how much money to keep in your emergency fund is three to six months of living expenses. Emergency savings will protect you from debt if unexpected problems arise. If the water heater goes out or you have an unexpected car bill, you will have a cushion of protection. It also gives you flexibility if you lose your job or a loved one has an expensive medical event.

#3 Check your credit report each year

Review your credit reports each year – for free – at . With the prevalence of identity theft and the changing nature of people’s credit, it is important to know what is actually on your report.

If you find accounts or charges that are not yours, contact the creditor immediately to dispute the charges and close the account. If someone tried to steal your identity, . They will create a personalized recovery plan for you. (Click to read more about how to protect yourself from financial scams.)

Reviewing your credit report can also lead to positive surprises.

“I had a couple come in to review their credit report,” Christensen said. “They came in with shoulders a little slumped and eyes cast down when they told me there would be things on their credit report that they weren’t proud of. As we reviewed their credit reports, we quickly realized the items they were afraid to see had already been removed due to the seven-year reporting limitation.”

Christensen continued: “This couple had intentionally avoided looking into purchasing a home because they assumed their credit rating was too low. As it turned out, they had very good credit. When they left, they had a bounce in their step. Two months later, I ran into them, and they told me they were about to close on their first home.”

#4�� Reduce debts and think carefully before taking on more debt

Over time, credit card bills can snowball and overwhelm people without an emergency fund or a plan to pay off their debt.

Debt can cause significant stress and physical and mental ailments. It can also cause people to miss out on vacations, family time or a better quality of life.

“Overwhelming consumer debt equates to major opportunity costs,” said Christensen. Households that are using their entire current income to pay off past purchases will miss out on:

• Investing in retirement plans, making retirement years harder
• Saving for emergencies, causing stress when the inevitable emergency comes
• Creating memories through shared experiences (travel, gifts, etc.); no cushion in the budget leads to missed opportunities
• Advancing financial goals, like replacing a vehicle, upgrading appliances and furniture or providing for children’s college education

To cut back on debt, consider which services and purchases you can cut and be cautious about taking on long-term financial obligations.

“Avoid contracting for a gym membership you will likely never use,” Christensen advises. “If you can’t get yourself to exercise at home (calisthenics, walking/jogging, etc.), you’re highly unlikely to sustain any habit of going to a gym. Plus, many gym contracts come with onerous terms that don’t permit you to get out of the membership without paying the entire annual contract.”

Also, watch out for tempting sales and offers. “Buy-Now-Pay-Later purchases are specially designed to get consumers to buy more than they can afford,” Christensen warns.

You can try to reduce your debt on your own by using the debt snowball or debt avalanche methods.

The debt snowball method encourages you to pay off the smallest debt you have first. Then use the extra money to pay off the next smallest debt and so on. This results in immediate progress and helps many people keep going on their debt repayment journey.

The debt avalanche method focuses on paying off the debt with the highest interest first. This method saves more money, but may take longer.

Other debt help strategies include debt management plans through a non-profit credit counseling agency (like �鶹��Ƶ members), debt settlement or bankruptcy. Learn more about each here.

�鶹��Ƶ’s non-profit members offer a free consultation and affordable debt and credit counseling as part of their educational mission.

#5�� Set financial fitness goals

Regardless of your financial situation, planning for your financial future is wise. Just like you set goals to reach a number on the scale or fit into a special outfit, do the same to get financially fit! Set a goal to save for a vacation, a downpayment on a house or long-term retirement.

Consider opening an additional savings account at your bank, and start saving! Set up a direct deposit to help you commit to your goals. Ask about a high-interest savings account to make your money work harder.

When planning for a large expense, reframe your thinking. Instead of putting a large expense on a credit card or financing, can you cut back and save aggressively leading up to the purchase?

“Car payments, just because they’re the norm, are a big pitfall. Big car payments are about the fastest way to get a household into financial trouble,” said Christensen.

“The typical car loan payments are now over $500 per month, but that doesn’t mean they’re a good idea. The average household transportation expenses (payment, insurance, gasoline) should not exceed 10 percent of household gross income.”

Good financial fitness provides benefits

Developing and maintaining good financial fitness builds the strength to overcome temptation, discipline to save, and pride in your good habits.

Healthy financial fitness also builds good credit. Higher credit scores allow you to obtain lower interest rates on car, home or other loans.

Financial fitness also allows for greater generosity, flexibility and enjoyment of life through leisure time, travel, hobbies and more.

Need help getting started?

If you need help developing healthy financial fitness habits, contact one of our member agencies. �鶹��Ƶ member agencies are experts in budgeting, debt and credit counseling, and debt management plans.��

Don’t struggle to build a budget or get out of debt on your own. Tap our trustworthy network of certified, non-profit members whose mission centers around helping people get out of debt, not making money at your expense. �鶹��Ƶ an �鶹��Ƶ member counselor today!

Editor’s Note: This article was originally published in January 2024 and was updated in April 2026 with more current information.

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Finances can be confusing. Debt and credit are two aspects of finances that most people deal with at some point in their lives. This article will help you understand what debt mix and a credit mix are and how that information can help you better manage your finances.

Understanding your debt mix and credit mix makes it easier to improve your credit score and opportunities for borrowing.��

What is a debt mix?

A personal debt mix refers to the amounts owed across different types of credit accounts, such as credit cards and car loans. Your debt mix focuses on how much debt you owe and to what type of accounts – either secured or unsecured loans.��

Secured debt is a loan or credit line that is backed by an asset, like a car or a home.��

Secured debt is safer for lenders because, if the borrower stops repaying, the lender can seize the asset. Mortgages and auto loans are examples of secured debt. This means if you stop paying your mortgage, since it is a secured debt, the lender can seize the asset – your house.��

“Secured loans are generally less risky for lenders, so consumers may have more lenient credit requirements, and their payment history on these loans may be weighed heavier when determining credit score impact,” said , Senior Director of Enterprise Learning for MMI, an �鶹��Ƶ member agency.

Unsecured debt is a credit line or loan that does not require an asset to borrow from the lender.��

Credit cards, student loans and personal loans are examples of unsecured debt. If you don’t pay your credit card balance, the lender will not seize your lunch or your new purse. However, paying late or not paying at all will result in late fees, a decline in credit score, debt collection and/or legal action.��

“Student loans are unique because they are unsecured but are treated like secured debt in a scoring model,” said , Director of Strategic Initiatives for American Financial Solutions, another �鶹��Ƶ member. “They are evaluated primarily on payment history and the balance-to-loan ratio rather than revolving utilization.”

What is a credit mix?

The types of credit accounts where you owe money make up a credit mix. In a credit mix, debt is classified as revolving or installment credit.��

Revolving credit accounts include credit card accounts and home equity lines of credit (HELOC). With revolving accounts, you can borrow varying amounts of money up to a certain limit each month. These accounts typically have no set end date.

Installment credit accounts have fixed payments to be made at set intervals (e.g., monthly) over a set timeframe.��

Having and repaying both revolving and installment debt shows lenders that you can manage different types of debt responsibly. According to , “An ideal credit mix includes a variety of both revolving accounts and installment accounts.”��

One way lenders evaluate whether you have a good credit mix and debt mix is to look at your . A FICO score is a three-digit number calculated based on the information in your credit reports.

In a FICO score calculation, 35 percent is based on your payment history. 30 percent comes from amounts owed to lenders. The length of credit history makes up 15 percent of the score, and credit mix and new credit are 10 percent each.��

“Credit scoring models also use an algorithm, so the impact of an action could vary by consumer,” said Alderete.

How do you know if you have a healthy debt mix?

“Knowing your and what it means is a good place to start,” said Alderete.

To find your debt-to-income ratio, divide your total debt by your total gross income. Total debt includes housing, auto loans, credit cards and student loans. Gross income represents the amount of money you make before taxes and deductions.��

“A 36 percent DTI ratio is generally considered reasonable,” said Alderete, but it’s best to aim for an even lower ratio. A lower DTI indicates that you have a better balance of income to debt.

“It’s also important to consider the different types of debt you’re managing and how this contributes to your credit score and overall financial health,” said Alderete. “Your ability to make regular fixed payments on secured loans, like a mortgage or auto loan, could indicate a lower borrowing risk, thereby weighing more heavily in what makes up that 10 percent of your FICO score.”

Does how much unsecured credit you use affect your credit score?

Yes, the amount of your credit limits used on unsecured debt versus secured debt will impact your credit score.��

“The distinction between the debt types comes down to volatility versus predictability,” said House.��

“Credit utilization primarily tracks revolving debt like credit cards and revolving lines of credit. In a FICO credit score, this accounts for 30 percent of the score. Because people can spend, pay and re-borrow, scoring models view high balances as a red flag for financial over-extension.”

However, House explained, installment loans, such as mortgages and auto loans, are fixed. They move in one direction – down – because balances drop as payments are made.��

“Scoring models view these as a sign of stability if payments are made on time. Basically, high utilization on a credit card signals a potential crisis, while a high balance on a new mortgage simply signals a new homeowner,” she said.

Does unsecured debt hurt your credit score more than secured debt?

“It’s not that one type inherently hurts a credit score more,” said House. “It’s how the debt is used.”��

The composition of debt mix is important in credit score calculations. Balances on secured loans drop with every payment. The main factor being measured is payment history – the largest part of a credit score.

“With unsecured, revolving credit – like credit cards – scores consider payment history and how much of the available credit is being used,” said House. “High utilization can lower scores even when payments are made on time, making unsecured debt appear more harmful if balances stay high.”

What hurts your credit score more – missing an unsecured credit card payment or a secured mortgage payment?

“Missing payments on any type of debt will hurt payment history and cause a score to drop,” said House. “Late payments on mortgages and credit cards typically cause a significant decrease, which varies depending on the person’s starting score and their overall credit profile.”

House said borrowers with higher starting scores may experience the largest credit score declines. Since their profile contained less negative or risky information before the missed payment, the event indicates the borrower has become riskier and alerts lenders.

“Mortgage delinquencies often trigger sharper declines because housing payments are viewed as highly predictive of financial stability,” said House.��

There is also the risk of foreclosure on a home or repossession of a vehicle, which can significantly damage a credit score.

If you cannot pay all of your bills, which should you pay first?

“If you’re unable to pay all of your bills, first assess your financial situation to determine your income and expenses. This puts you in the best position to plan, prioritize and negotiate,” said Alderete.��

Then, contact your creditors and service providers to explain your situation and discuss your options. Many creditors have hardship programs available, and they want to help, she shared.��

Next, use all available resources to prioritize payments.��

“Completing a ‘wants versus needs’ assessment can help you determine which expenses are necessary,” Alderete advised. “Typically, these are expenses for things needed to survive, like rent or mortgage, groceries, transportation to and from work, etc.”��

Remember, any missed payment will likely impact your credit score. As you identify options, ask about the impact on your credit score. Also, always get agreements in writing and keep accurate records in case you need to contest fees later.

“If you’re struggling to make payments or have a gap in your monthly budget, reach out to an �鶹��Ƶ member right away,” said Alderete. “It’s never too soon to ask for help and explore your options.”

How does medical debt affect your debt mix and credit score?

“Medical debt is the most ‘forgiven’ type of debt in the credit world because it is involuntary; no one chooses an emergency room visit,” said House. “Newer credit scoring models give less weight to medical bills because they are not a good predictor of how someone will pay their bills.”��

Recent legal updates also impact how medical bills appear on credit reports, House shared. These include:

• Removing paid medical bills from credit reports
• Requiring medical facilities and collection agencies to wait one year before reporting an unpaid medical bill to credit reporting agencies, providing time for insurance payments and for the person to explore other repayment options.
• Preventing medical debt under $500 from appearing on a credit report or score

How can a debt management plan help someone rebalance their debt mix?

A debt management plan (DMP) can help stabilize your finances in two ways, according to House.��

First, a debt management plan consolidates unsecured debts into a single structured payment.

Second, your credit counselor will work with your creditors to reduce interest rates on accounts. This allows more of each payment to go towards the principal of the debt, helping balances fall faster,” said House.

Debt management plans also help rebuild payment history and immediately begin lowering balances.

“Even though a DMP doesn’t add new types of credit, it strengthens the two areas that matter most in someone’s existing mix: on‑time payments and lower revolving balances,” said House. “Over time, this leads to a credit file that looks more stable and less dependent on high‑risk debt.”

For example, American Financial Services’ client Krysta called in with a credit score of 645 and $80,300 in unsecured debt. After 15 months on a debt management plan, her score rose to 785, and she paid off $26,700.��

“This is a clear example of how improving payment history and reducing revolving balances can meaningfully shift someone’s overall debt mix and credit profile,” said House.

�鶹��Ƶ an �鶹��Ƶ non-profit credit counselor today to get help with your debt. Call 800-450-1794.

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Whether it’s expected or out of the blue, losing your job takes a toll – both emotionally and financially. As you wrestle with the changes that come with a job loss, financial uncertainty likely tops your list of concerns.����

Fortunately, there are options for financial help after a job loss or layoff. �鶹��Ƶ asked our member experts for their best advice on what to do after losing your job. Here, we share tips to protect your finances, prioritize your bills, find financial help and avoid common pitfalls after a job loss.��

Current job cuts and financial stressors

According to a recent , American companies cut more than one million jobs in 2025. This made the year one of the worst for job losses in decades.��

Trump’s tariffs, the government shutdown and layoffs also had a major impact on the U.S. economy and consumer finances.��

How can you protect your finances after a job loss or layoff?

“The first step is to stay calm and get organized,” said April Lewis-Parks, Director of Education and Communications for Consolidated Credit. “Job loss can feel devastating, but acting quickly and logically will help protect your finances.”

File for unemployment or severance pay immediately

Immediately identify sources of income, such as unemployment or severance benefits, and apply for them.��

“Approval can take weeks, so apply as soon as possible,” said Russell Graves, Executive Director for the National Foundation for Debt Management. “These benefits won’t replace your full income, but they provide a critical lifeline.”

Next, assess your financial situation��

“Start by reviewing your essential monthly expenses – things like housing, food, utilities and transportation. Determine exactly how much you need to cover those basics each month, and then look for ways to reduce or defer costs where possible,” said Lewis-Parks.

Identify how much cash you have available in your checking, savings and emergency fund. Then review your unemployment income and allocate funds to pay down essential bills first.��

Do not include your retirement savings in your initial assessment, experts advise. Tapping retirement accounts too early can trigger income taxes and penalties and set your retirement plan up to fail in the future.

Look for ways to maximize income

Consider short-term revenue opportunities, like delivery work or substitute teaching, that can be done while searching for a permanent position, advised Manuel Salazar, CEO of Take Charge America.

“Remember, [finding a new job] usually takes at least a few weeks from application to employment in a well-paying job, so don’t wait to begin the job search process,” said Salazar.��

Preserve as much cash as you can��

“That means stopping all unnecessary spending and living on a crisis budget,” said Salazar.

He recommends making drastic changes immediately, such as eliminating dining out, unnecessary car trips, and lottery tickets. “Cancel all subscriptions and say no to all solicitations. Whatever cash exists, and whatever credit exists, should be preserved.”

Graves advised cutting back on extra debt payments and only paying minimums.

To best manage your cash, Graves said, “Focus on essentials, track spending weekly, and use tools like budgeting apps or spreadsheets. Or, go old school and use a small notebook to jot down every time you spend money.”

�鶹��Ƶ your creditors and service providers early

“Many creditors, from mortgage companies to auto lenders to credit card companies, will work with customers to provide some relief,” said Salazar.��

“Some may add a payment at the end of a loan and forgive an immediate payment. Some may temporarily lower interest rates. Many lenders have a defined hardship plan for consumers who lose a job.”

The key is, you have to ask, added Graves.��

�鶹��Ƶ member credit counselors can provide guidance on working with your creditors. They can also help you find ways to best use your available resources and credit.��

What bills should you pay first?

When income is limited, prioritize the most essential bills first – those necessary for you to survive. If you lose your job, pay these bills first:

1. Housing – Stay current on your rent or mortgage if possible. Losing your home will make recovery much harder.
2. Utilities – Electricity, water and internet are necessities for daily life and job searching.
3. Food and healthcare – Maintain access to basic nutrition and necessary prescriptions.
4. Transportation – A vehicle or bus pass enables you to get to job interviews, part-time jobs and sources of aid, like food banks. Be aware, there are very few sources of assistance for car payments.��

“The next bill to be paid is the one with the greatest penalty for late payment – typically a credit card that did not agree to a temporary hardship plan or was not contacted in order to keep one card in a usable condition,” advised Salazar.

“If the crisis lasts much longer than a month, bills should be paid on a rotating basis to avoid losing utilities and to prevent collection calls.”

Where can you find financial help after a job loss?

Financial help for unemployed people is available. Our financial counseling experts suggest these resources:����

• – This site will direct you to your state benefits, including SNAP, Medicaid, COBRA (for health insurance) and the Low Income Home Energy Assistance Program (LIHEAP) for energy bills.
• – This site connects people to local assistance programs, including food, housing and utilities.��
• – Military veterans may be eligible for VA programs and assistance. The National Veterans Financial Resource Center (FINVET) is one such resource.
• – If you are 62 or older but have not taken Social Security, consider drawing retirement benefits. Talk with a financial counselor about the pros and cons of this strategy.����
• Financial Counseling Association of America – Our non-profit organization connects people to certified credit counselors who can help them map out next steps based on their income and debt level.
• Local nonprofits and credit unions – Search online to find programs in your state or local area. Many local programs offer emergency grants or temporary financial help.

How can you prevent falling into debt after a job loss?

No one wants to come out of a period of unemployment deeper in debt. These tips can help you reduce or avoid debt, despite the financial uncertainty.

• Manage your budget well. “Revisit your budget weekly and keep a close eye on your spending. Try to maintain enough savings to cover one month’s essentials while you search for new income,” said Lewis-Parks.
• Find a side hustle. “Part-time work can help, as long as it doesn’t create more stress or cost money upfront,” advised Lewis-Parks. Think about gig or freelance work that uses your existing skills. You could try delivery driving, tutoring, pet sitting or selling items online.��
• Keep your hands off your retirement savings. Tapping a 401(k) should be a last resort, according to Graves and Lewis-Parks. If you take early withdrawals, you’ll likely face taxes and penalties. You may also lose future growth potential that could significantly hurt your retirement security.��
• Recognize the risks of personal loans. Personal loans can sometimes bridge a short gap, but they come with risks like high interest rates and credit score impacts if you fall behind on payments. “Taking on new debt without a steady income can dig a deeper hole. If you must borrow, keep it small and short-term, and compare lenders carefully,” said Lewis-Parks.
• Take a mediocre job with benefits while you continue to search. “Even if it isn’t a good job and even if it is minimum wage, having a job is good for morale and good for cash flow,” said Salazar. “That doesn’t mean abandoning the real job search, but few people can go months without a paycheck and health insurance.”

Financial pitfalls to avoid after losing a job

Losing a job can be traumatic, and different people react differently to the experience. To recover from a job loss, focus on what needs to happen, organize yourself and take positive steps forward.

“The biggest mistake is ignoring the problem,” said Lewis-Parks. “Many people go into denial and keep spending as if nothing has changed, hoping to find another job quickly. That’s when credit card debt starts to spiral.”

Ignoring bills and using credit to maintain your lifestyle will put you on a dangerous path.��

“Silence can lead to collections and credit damage, so communicate early. Creditors have in-house temporary programs to assist, with some offering no payment required for a period of time, and others requiring interest only,” said Graves.

On the other hand, acting out of emotion with your finances can also sabotage your efforts. Avoid cashing out retirement accounts or maxing out credit cards. And don’t take on unnecessary new debt. High-interest loans or cash advances can quickly add up and trap you in debt.��

How a credit counselor can help after a job loss

“Losing a job can feel overwhelming, especially when bills are mounting and the future feels uncertain. However, you’re not alone. There are steps you can take with a credit counselor right now to help stabilize your situation,” said Graves.

�鶹��Ƶ member credit counselors can help you review your budget, identify immediate needs and find ways to cut expenses. Because of our existing relationships with creditors, we can easily help you find and access your creditors’ hardship programs.

Furthermore, �鶹��Ƶ members have many resources to help unemployed people. Our members can help you identify unemployment benefits, local assistance programs, upskilling or reskilling programs and temporary work options.��

Connect with an �鶹��Ƶ member credit counselor for help today. Start by clicking here.

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In this article, the Financial Counseling Association of America (�鶹��Ƶ) offers guidance on preparing for a disaster and accessing disaster recovery resources.

Disaster preparedness – the best defense is a good offense

“There are two flavors of disaster counseling – disaster assistance and disaster preparedness,” explains Emanuel Rivero, vice president at Money Management International, an �鶹��Ƶ member agency. People often overlook the preparedness aspect.

�鶹��Ƶ stresses the importance of having a family plan in case of emergency, and that means preparing for the worst and the unexpected. Many natural disasters involve loss of all communications – no cell lines, no land lines, no TV, no weather radar. You may find yourself with no way of knowing what is happening and no way to communicate with family, neighbors and community.

Planning ahead means going back to basics. Keep a battery radio and, if possible, a satellite device on hand. Keep an emergency reserve in cash, as banks, ATMs and credit card systems may be closed or offline.

Most people never expect to experience devastation from a natural disaster or other severe weather event. However, with climate-related emergencies on the rise across the country, it is wise to anticipate the types of events that could occur in your area. Whether you’re susceptible to hurricanes, wildfires, floods, earthquakes or tornadoes, being prepared in advance is the first important step.

Professional credit counselors encourage consumers to safeguard their homes, finances and personal well-being before a disaster strikes. Take these steps for disaster preparedness:��

Personal Safety

• Assemble an emergency supply kit with essential items: water, non-perishable foods, medications and first-aid supplies, flashlights, batteries and important documents. Get more tips on .��
• Plan for the special needs of any children, pets, elderly or individuals with disabilities.��
• Create a list of important contacts with contact information, including family members, neighbors, local emergency services and utility companies.
• Plan your evacuation routes in advance and discuss meeting places with family and friends.

Securing Your Home

• Consult with experts for recommendations on reinforcing your home to withstand disasters. This may include reinforcing roof connections and installing storm shutters over windows to protect against wind and rain. It may also involve clearing vegetation and selecting fire-resistant siding and roof materials in the event of wildfires.��
• Review your home or renter’s insurance to make sure you have adequate coverage and understand any exclusions for climate-related damage.
• Make sure your home is in your name and you have a copy of the deed showing a clear title. Some homes are passed down through generations with no clear proof of ownership. Having a so-called “tangled title” can make it difficult to gain access to insurance money or grants for rebuilding after the disaster.
• Know how to turn off your gas, electricity and water in case of emergency.

Financial Safeguards

• Protect your important financial documents by storing copies in a secure, waterproof and fireproof location.
• Establish an emergency fund to cover unexpected expenses such as temporary housing and/or home repairs from weather or fire damage.
• Plan for potential disruptions to your income and employment.
• �鶹��Ƶ a credit counselor for help getting your budget, debt and savings in a good place so you can withstand the financial impact of a natural disaster.

“It’s unrealistic for most people to have six months of living expenses tucked away in savings,” says Rivero. “In fact, many individuals have nothing in savings, and 50 percent of those who do have less than $750.”��

�鶹��Ƶ’s certified credit counselors can help individuals get out of debt and begin building an emergency fund. Counselors work with individuals to understand their financial situation, sometimes recommending a debt management plan (DMP) for those struggling to pay off debt.

A DMP structures monthly payments that are affordable and can actually help improve the person’s credit score over time. With a good credit score, individuals have more financial flexibility in the event of a disaster.

Getting help in the aftermath of a disaster

The (FEMA) has traditionally brought day-one assistance to individuals and communities in the event of a major disaster. FEMA workers are the first boots on the ground, providing financial and direct assistance to help with food, water, housing, repairs and other needs.

Furthermore, FEMA connects people with first responders and other support resources, like the American Red Cross. FEMA also maintains good relationships with credit counseling agencies (CCAs) across the United States, which can guide individuals in obtaining financial assistance and/or loan relief after a disaster strikes.

While this has traditionally been FEMA’s role, federal budget cuts may impact what the government agency will be able to do in the future. Therefore, it is critical to be aware of other organizations that offer disaster recovery assistance.��

Various agencies and other organizations offering disaster relief programs include: ����

• Emergency response and recovery agencies in your state, county or municipality

Credit counselors step up in times of emergency

�鶹��Ƶ represents many CCAs that work with local and state governments to ensure that funding is available for inevitable climate disasters.��

“While CCAs typically counsel consumers who are in trouble with credit card debt and other unsecured loans, many will shift their focus in the moment to help individuals in the aftermath of a disaster,” according to Rivero. “We understand that people need financial information to address their immediate needs. Discussions about debt accumulation can come later.”��

Linda Davis-Demas, vice president of Housing at BALANCE agrees. “Agencies are aware of the funding and programs that are out there. They also understand the process and can guide individuals on the right questions to ask their insurance company, finding access to assistance programs, and contacting their creditors for loan forbearance.”��

Housing counseling – a subspecialty of credit counseling

“Many of our credit counseling agency members offer HUD-certified housing counseling,” said Lori Pollack, executive director of the �鶹��Ƶ.��

If the person’s home is uninhabitable following a disaster, counselors can assist in finding temporary or permanent alternative housing options. They may also be able to help individuals negotiate mortgage forbearance and explore options for refinancing or modifying their loan.

“It’s important to remember that everything goes very, very, very slowly when it comes to disaster assistance,” said Russell Graves, executive director of the National Foundation for Debt Management, a member of �鶹��Ƶ. “Federal aid does not come for months or years, but local and state assistance can happen faster.”

When to talk with a professional credit counselor

Non-profit credit counseling agencies offer personalized guidance to help clients rebuild their lives and achieve long-term financial stability. Whether it’s paying down debt and improving your credit score, budget planning to start an emergency savings fund or finding assistance after a disaster, the �鶹��Ƶ can connect you with a counselor you can trust.��

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The choices you and your child make about this simple piece of plastic are weighty. Getting a credit card early can build your child’s credit and their financial responsibility, but it also has significant risks.

What should you consider before you send your child to college with a credit card? And how can you prepare them for success?��

This article will discuss the pitfalls and benefits of credit cards for college students, important factors to consider and how to prepare your child to have a credit card.

Credit cards and college students

Building credit is the young adults give for opening a credit card.����

According to data from , 85% of college students have a credit card. Just over half of those college-aged credit card users pay the full balance on their cards each month.��

However, a third of college students pay just the minimum balance or a bit more. Carrying a credit card balance is dangerous because it can quickly snowball into significant debt. The average credit card balance among college students is $2,088 (excluding $0 balance accounts).��

Below are some common college credit card pros and cons.

Credit pitfalls for inexperienced students

Young adults with a credit card typically lack financial literacy and guidelines for using credit, which can quickly get them into trouble.��

1. They don’t understand how credit cards work. Often, young adults struggle to understand how credit cards work and that they must repay the money they borrow.��
2. They don’t understand compounding interest and how quickly their small balance can grow if they miss payments or only pay the minimum balance.
3. They are not in the habit of budgeting or regularly paying bills.��
4. They give in to peer pressure. College students often feel tempted to overspend on dining out or to match the spending habits of others.��
5. They don’t understand the importance of safeguarding their credit card number. College students may have a false sense of security and leave their credit cards lying out in their rooms.

“The most common mistake we see is overspending,” said Kim Cole, Community Engagement Manager for Navicore Solutions, an �鶹��Ƶ credit counseling agency. “Ironically, many charges we see are the students taking their friends out for dinner or buying drinks for everyone at a local bar. They use the card as a social tool, and when the payment on the credit card comes due, they are not prepared to pay back what they charged.”

Depending on the type of card your child has, their risky behavior or mistakes could affect your credit, too. It’s critical to ensure your child is ready for a card, has clear rules and expectations and understands how credit cards work.

Benefits of building credit in college

Sending your child to college with a credit card does have its benefits. Opening a credit card while in college can be easier for some young adults, and it lays the groundwork for building a positive credit history.��

A good credit score can help college grads as they rent an apartment, apply for jobs, refinance student loans or open other credit card accounts.��

Having a credit card in college can teach financial responsibility, budgeting and the importance of paying bills on time.��

Signs your student may be ready for a college credit card

Before your child took their first steps, you learned to see their progress and encourage them. Those same observational skills will help you recognize the signs that your child is ready to get their first credit card.

Look for your child to exhibit these capabilities:

• Maturity – Teens and young adults tend to be impulsive and make decisions based on emotions until their brains fully develop in their mid-20s. Exhibiting financially responsible behaviors, like paying back borrowed money or saving for a large purchase, are signs your child may be ready for a credit card.����
• Ability to pay off credit card balance in full each month – “In my home, I would not allow either of my children to have credit cards until they were over 18 and had the ability to pay back the amount they had charged on the credit card,” shared Cole.
• Good understanding of financial literacy and how credit cards work – Your teen should regularly check their bank account, budget their money and demonstrate an understanding of how credit cards work.

Preparing your child to have a credit card

“Parents should be teaching their children basic financial literacy before their teens get their first credit card,” said Cole.��

Financial literacy is the knowledge, understanding and ability to manage one’s personal finances well. Parents teach financial literacy to their children by teaching them how to manage their money, save for a big item or event, open a bank account, and more.

“Topics such as compound interest, credit reporting and scoring, and understanding how to establish a budget will give them a better understanding of how credit cards work,” Cole said.��

“They need to understand that when they charge items on a credit card, they will pay more for the item if they do not pay off the card in full each month. Young adults also need to understand the penalties for missing payments and the rewards that come with excellent credit.”

Todd Christensen, Housing and Education Manager for Debt Reduction Services, recommends that young adults meet four financial responsibility guidelines before opening a credit card:

• Find and maintain a steady income for six to 12 months, expecting it to continue.
• Create and live by a budget for six to 12 months.
• Build a savings fund to cover one to two months of living expenses.
• Use a debit card for six to 12 months without any declined charges.

Read about more financial milestones for Gen Z.

Selecting the best credit card for your teen

When selecting the right credit option for your college student, you have a few options, including a secured credit card, a student-specific credit card or making your child an authorized user on your credit card.

A secured credit card is a type of card backed by a cash deposit provided by the cardholder, in this instance, you or your teen. The deposit is essentially collateral in case your child cannot make timely payments. The deposit becomes the credit limit. Secured credit cards typically have more fees, but people regularly use them to build their credit score.

A student-specific credit card is designed for young adults attending college, either full-time or part-time. No collateral or security deposit is required. Applicants without a credit history can apply for a student credit card. Some credit companies let college students transfer their credit cards to a regular account after graduation.

Adding your teen as an authorized user on your credit card gives them a card with their name on it that is linked to your account. If your child is responsible, this can be a good way to gradually give them more freedom. But it is important to remember that you are ultimately responsible for anything your teen charges.��

“You can contact the credit card company and have them put a limit on the amount that can be charged, therefore guaranteeing that the student does not charge more than you are comfortable with,” shared Cole.��

Setting appropriate limits for your child’s first credit card

Regardless of what type of credit card you choose, setting clear rules and expectations for how your child uses and takes care of the card is a must.��

“First, a conversation should be had about what the college student should be charging on the credit card. If it is for emergency use only, define what an emergency looks like,” said Cole.��

Then, outline clear spending limits, payment requirements and the consequences of misusing the card. Responsible use of credit is possible for college students, but they should start with a small credit limit and pay the bill in full each month.

According to Karen Carlson, Vice President of Education for InCharge Debt Solutions, if the student is paying the bill, the prerequisite needs to be a job. “The initial credit line should be small ($300 to $500), and the student should monitor their spending using technology (alerts from a budgeting application, for example),” says Carlson.

“If a parent is paying the bill, then the student should be an authorized user on the parent’s account,” she continued. “Parent and child should set expectations around acceptable monthly spending. Both should monitor weekly to make sure things don’t get out of hand.”

��“Being responsible with credit means not only using the card wisely but also taking the proper precautions to prevent credit card theft,” says Cole.

Cole urges parents to talk with their college students about protecting their credit card number, knowing where their card is at all times and not leaving it out in the open, even while in their dorm room.

Credit counselors are here to help

Sending your child off to college is a big step, and so is giving them access to credit cards. Before you say “yes” to a credit card for your college student, consider whether they are mature enough to handle credit card responsibility.��

Every day, the Financial Counseling Association of America helps people who have fallen into debt and need help to get back on their feet. Our nonprofit member agencies have certified counselors who listen without judgment and offer unbiased advice to help people create livable budgets, better understand their finances and overcome their debt.��

Carefully consider whether a college credit card is the right step for your college-bound student to prepare them for success. If we can help you or your child with free financial advice, don’t hesitate to call 800-450-1794.

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Financial literacy describes a person’s knowledge, understanding and ability to manage their personal finances effectively. It includes budgeting, money management, paying off debt, growing their savings, investing and more.����

Why does financial literacy matter?

Every day, you make choices about what to do with your money. If you don’t understand how to create a budget or manage finances, you are more likely to overspend, neglect your savings and fall into debt. High interest rates can cause this debt to snowball out of control and cause stress, instability and relationship problems.

Helping people learn how to manage their money wisely is a core part of the mission of the Financial Counseling Association of America (�鶹��Ƶ) and our non-profit members. We help people become more financially literate so they can be smart with their money, get out of debt and stay out of debt.��

“�鶹��Ƶ member agencies are focused on improving financial literacy nationwide because the ability to effectively manage money is a fundamental skill that everyone needs,” said �鶹��Ƶ President Martin Lynch. “Our goal is to help people understand the basics of how to manage their money, helping them avoid financial problems while giving them the knowledge and confidence they need to handle any challenges that might come their way.”

While many states do require financial education courses for high school graduation, evidence shows that these lessons are not enough to become financially aware and responsible. Currently, is at an all-time high of $1.21 trillion, and the is more than $105,000. More than a quarter of U.S. households live paycheck to paycheck.��

Fortunately, through the efforts of the �鶹��Ƶ and our members, thousands of people are gaining the skills they need to live financially healthy lives.��

Key aspects of financial literacy

Good financial education includes planning for both the expected and unexpected aspects of life. Some important financial literacy skills you should know include:

• Income and expenses – “It’s important for your own financial well-being that you have a solid basic understanding of your income and expenses,” said Lori Pollack, Executive Director of the �鶹��Ƶ. “You should know how much money your household brings home and what expenses you must pay.”

• How to use a bank account – Bank accounts provide a safe place to save money, deposit checks and pay bills. Different accounts work in different ways to help you achieve your goals.����

• Budgeting – “All consumers should know how to create an accurate working budget and how to adjust that budget as their circumstances or goals change,” said Lynch. “They should also know how to budget for specific goals, like buying or maintaining a home, taking a vacation and the ultimate – retirement.”

• Understanding your credit report – “All consumers should understand how to read their own credit report and fix any mistakes they see, because there will be mistakes from time to time. They should also know the five elements of their credit score and how to avoid common mistakes and scams that will damage their score and waste their money,” said Lynch.

• How to deal with a financial challenge – “Whether it results from a loss of income, an increase in expenses due to inflation, or any one of a thousand personal scenarios that can impact your family’s finances, you must know how to handle a financial challenge,” said Lynch. “If you understand the fundamentals of personal finance, you’ll know how to evaluate your options in an emergency and make the best choices for yourself and your loved ones.”

• How to create and maintain an emergency fund – Life has a way of throwing unexpected storms in our path that can have serious financial consequences. An emergency fund allows you to better weather the storms.��

Ways to become financially literate

Building a solid financial foundation isn’t as hard as you might think. �鶹��Ƶ and our member agencies can help:��

Tap into free educational resources online

“We know that people are incredibly busy these days, but if you can find just 10 to 15 minutes a week, you can significantly improve your financial literacy through an �鶹��Ƶ member’s website. Our members offer free budgeting tools and free articles on hundreds of topics,” said Lynch.

Explore the wide variety of free community education programs available to help you and your family learn the basics of personal finance through �鶹��Ƶ members or trustworthy organizations like Experian or TransUnion.������

Connect with a non-profit credit counselor

“If you’re not financially literate in today’s world, you can get into debt very quickly. Our counselors help people regain control of their finances, alleviating the stress that comes from trying to manage your money without fully understanding how the system works,” said Lynch.��

Non-profit credit counseling agencies that are members of the �鶹��Ƶ have an educational mission to advise people about money and debts. They are carefully vetted and certified to ensure consumers receive trustworthy, unbiased advice.��

�鶹��Ƶ member agencies provide one-on-one counseling and education to individuals at every income level, helping them overcome their challenges and reach their financial goals. And, you don’t need to wait for an emergency to talk to an �鶹��Ƶ counselor or attend a seminar.��

“If you don’t see the information you need on their websites, our counselors will answer specific questions you have about your finances for free,” Lynch shared.

Build a budget with a free budgeting calculator

“We can never say often enough how essential a budget is to a successful financially literate life,” shared Pollack. “If you don’t know where to start, the �鶹��Ƶ has a free budget calculator that will allow you to quickly see where your hard-earned money is going.”

Once you enter all the information, the budget calculator will give you feedback on how well you are doing with your debt repayments. After using �鶹��Ƶ’s budget calculator, you can connect with a non-profit credit counselor for more help or use the budget you created to track your spending and manage debt.

Increase your financial literacy with �鶹��Ƶ

Understanding your finances and how to make informed decisions about money is vitally important. With a solid understanding of financial concepts, you can build more financial stability and security.

Take advantage of free online resources or talk with a non-profit credit counselor to develop healthy financial skills like money management, budgeting, saving, investing and how to understand your credit report through free online resources.

By growing in your financial literacy, navigating financial decisions and reaching your financial goals will become easier, and you will be better prepared for any challenges that may come your way.

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