Growth & Jobs | How good financial habits can build generational wealth

SOME 1,000 Jamaicans are being targeted to promote positive credit habits and overall good financial management practices through a series of training and engagement activities organised by the JN Foundation’s Financial Academy.

Rose Miller, lead for the financial empowerment programmes at the JN Foundation, outlined that three workshops would be hosted across the island to raise the level of financial literacy, which if applied correctly, can build generational wealth.

The workshops are the first training sessions being offered by the newly established JN Financial Academy, which is aimed at empowering Jamaicans to achieve financial freedom by providing information, training, and mentorship.

The sessions will be held virtually on November 3, 17, and December 1. Persons who wish to enhance their understanding of credit products and develop better financial habits are invited to visit the JN Foundation website, www.jnfoundation.com, to register to attend one of the three workshops.

“One of the issues we will explore at the workshop is smart management of existing debt obligations,” Miller noted. “Servicing loans, paying bills , and honouring debt in a timely manner is important to nurturing responsible habits when it comes to borrowing money.”

Noting that many persons underestimate the importance that being organised plays in managing their debt, Miller explained that when bills are kept in order and a system of payment established, the chances of missing a payment would be lower. This, she said, is important as overdue payments can be costly and also negatively affect one’s credit score, which is determined by consumption of credit products as well as payment history on bills and loans.

“You can repair or build a good credit score over time by setting up a payment system to effectively manage your obligations. A simple way to get organised is to create folders for both electronic and physical bills and also setting payment date reminders,” she suggested.

She also pointed out that payment history is often tracked by financial institutions and credit bureaus.

“When a payment is missed, it’s reported by your creditor (the institution you owe), and the report they provide to the bureaus will affect your score almost immediately. Therefore, paying on time is a habit that you should develop and practise all the time.”

Miller emphasised that it is important for people to develop the ability to identify and prioritise needs over wants at an early stage in their lives. This, she said, means making sure that all necessary obligations are taken care of first, and credit is used only when absolutely necessary.

“Failure to prioritise needs over wants often leads to excessive indebtedness. We have to learn to borrow for productive reasons only,” she suggested.

She offers the following tips to help persons get smart about credit:

1. Consider whether it is a good time to take on debt.

2. Ensure that your budget can comfortably accommodate the additional monthly obligation.

3. Examine how an additional loan will impact your financial security in the long run.

4. Consider whether there is an alternative to getting into or increasing your debt.

5. Make sure you have an emergency fund – you may have to turn to it to avoid late payments and the corresponding consequences like late fees and damage to your credit score.

6. Ensure that you read, understand, and accept all the terms and conditions of the loan.

“Understanding the terms and conditions of a loan is critical to being smart about credit. You have to know what you’re getting into,” she stressed.

“These are some of the things we will explore at our workshops. And we will delve into other topics such as approaches to calculating interest on loans. It is not to be missed.” Miller said.

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