9 financial decisions that shouldn’t be taken into account

On any given day, you are faced with countless financial decisions. How much should you spend for lunch? Are you paying the best rate for your health insurance? Can you afford a vacation this year? While life would be easier if you could get through, that’s not the reality.

The reality is that you can make life a lot easier if you pay close attention to your finances. While your bank account is an important component of your overall finances, it is not your entire financial picture. So take a look at your accounts and consider these nine financial decisions you have a chance to act on. When you are done, you will feel more secure about your finances.

1. Say “Yes” to the extended car warranty

When you buy a car, you get the freedom of the road. But sadly, you also expose yourself to the possibility of countless headaches and thousands of dollars in repairs. A extended car warranty You can save your bacon if you buy a used vehicle or the manufacturer’s warranty expires.

Today’s cars are full of sophisticated software that is too capable of failure. However, with an extended auto warranty on your side, you’ll have peace of mind that many future high-value expenses are covered.

2. Save for known expenses

While you’re covered for major auto expenses thanks to your extended warranty, you still need to save for routine maintenance. First, check your owner’s manual for the preventive maintenance schedule and ask your dealer for general cost information. Then set aside money each month in anticipation of these expenses, and you will never be short.

You can use this same practice for your home, personal care, and pet expenses. By making sure these well-known categories of expenses are covered, you can use discretionary funds when life sends you a surprise, good or bad.

3. Negotiate the home warranty and keep it

When you buy a home, you often have the opportunity to negotiate a home warranty on your purchase. If the seller doesn’t offer it, be sure to ask.

Home warranties can help cover your home’s primary mechanical components, like your HVAC and appliances. These items are typically not covered by homeowners insurance and cost thousands or more to repair or replace. Most policies are valid for one year and can be renewed at an affordable price.

4. Stay on top of your credit score

Your credit score plays a big role in your financial situation and can be a deciding factor for life’s financial opportunities. Learn about your score, what parts of your financial history are included in it, and how you can improve it.

By law, you are allowed one free credit report per year from each of the three major credit bureaus. If your score is low, develop a plan to improve it. Start with the factors that are hurting your score the most, such as late payments or a high credit utilization rate. Take steps to address them (for example, set up automatic payment, pay off a balance) and you should see improvements in a few months.

5. Take advantage of life insurance offered by your employer

Open enrollment happens only once a year. So while it may be tempting to sign up just to get the basic benefits, don’t skip life insurance coverage.

Often times, your employer offers you the best rates for critical coverage like life and disability insurance. You can typically get thousands of dollars of coverage for just a few dollars per paycheck. So take care of your family and make sure your obligations are covered with this simple decision.

6. Invest for your retirement, regardless of your income

Whether you want to admit it or not, there will be a time when you will not be able to work. So save now for your eventual retirement and take advantage of the power of compound interest. If your employer offers a matching contribution to your 401 (k) plan, try to save at least that amount.

Carefully consider your investment options and pay particular attention to the target date funds. These funds take the guesswork out of selecting your investments and adjust over time as retirement approaches.

7. Have a debt settlement strategy and then put it on autopilot

Debt is a necessary evil, but it is essential to master it. Keep an up-to-date record of your debt obligations and prioritize your payment strategy based on your goals.

As noted above, you can ensure that you make payments on time by signing up for automatic payment. If you’re ready to pay off the principal balance on one of your debts, use automatic payment for that, too. Automating your debt payment The strategy ensures that you will stay the course, no matter how busy life gets.

8. Save for emergencies, even when times are good

Emergencies happen when we least expect them, that’s what makes them emergencies. So plan ahead and work to save three months on your basic expenses: housing, utilities, food, and transportation.

Resist the urge to use your entire annual raise to cover just the fun things in life. Instead, consider setting up an automatic savings deposit to redirect that money to your emergency fund. Then, once you’ve saved the expenses of three months, treat yourself to a job well done.

9. Know your value and request a raise

Even if you are satisfied with your work, you should always be aware of the current rate for the work you do. First, compare your current salary with what is reported on sites like Glassdoor. Then track your annual performance review and merit increases just as you would your work deliverables.

Treat your career like your own business venture and defend your advancement in both title and salary. If you are poorly paid, develop a strategy to discuss it with your supervisor and ask for a fair rate.

Take the easy route to financial wellness

Many financial decisions take time and deliberation. For example, should you rent or buy? Staying at your current job or pursuing your entrepreneurial dream? Investing in stocks, bonds, or physical assets like real estate? Choices like these require extensive research and contemplation.

Fortunately, there are some financial decisions that are so clear that they are practically ignored. So go ahead, take advantage of the easier fruits of the financial world. Once you have made these nine decisions, you will be calm.

Image credit: kampus production; pexels; Thank you!

Deanna ritchie

Deanna ritchie

Editor-in-chief at ReadWrite

Deanna is the managing editor for ReadWrite. Previously, she worked as the editor-in-chief of Startup Grind and has over 20 years of content management and content development experience.


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