9 Financial Decisions That Should Be No-Brainers

Every day you are faced with countless financial decisions. How much should you spend on 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 move on, this is not the reality.

The reality is, you can make your life easier by paying close attention to your finances. While your bank account is an important part of your overall finances, it is not your entire financial situation. So take a look at your accounts and consider these nine financial decisions that you can act on. When you are finished, you will feel more confident about your finances.

1. Say “yes” to the auto warranty extension

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

Cars today are full of sophisticated software that can only go too badly. However, with an extended auto warranty on your side, you’ll have peace of mind that there are many high future expenses covered.

2. Save for known expenses

While you are covered for major auto expenses with your extended warranty, you still need to save for routine maintenance. First, consult your owner’s manual for the preventative maintenance schedule and ask your dealer for general cost information. Then put some money aside each month for those expenses, and you’ll never be caught out.

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

3. Negotiate for the home warranty – and keep it

When you buy a home, you often have the option of negotiating a residential warranty in your purchase. If the seller doesn’t offer it, be sure to ask.

Residential warranties can help cover major mechanical components in your home, such as your HVAC and appliances. These items are generally not covered by your home insurance and cost thousands or more to repair or replace. Most policies are good for one year and can be renewed at an affordable rate.

4. Stay on top of your credit score

Your credit score plays a major role in your financial situation and can be a deciding factor in life’s financial opportunities. Know your score, the parts of your financial history and how you can improve it.

By law, you are entitled to one free credit report per year from each of the three major credit bureaus. If your score is low, make a plan to improve it. Start with the factors that hurt your score the most, such as late payments or high credit usage. Take steps to fix it (e.g. set up automatic payment, pay off a balance), and you should see improvements in a few months.

5. Take advantage of the life insurance offered by your employer

Open registration only takes place once a year. So while it may be tempting to buy just basic benefits, don’t skip life insurance coverage.

Often, your employer will offer you the best rates for essential protections like life insurance and disability. Typically, you can get thousands of dollars in coverage for just a few dollars per paycheck. So take care of your family and make sure your obligations are covered by 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 be unable to work. So save for your eventual retirement now and take advantage of the power of compound interest. If your employer offers a matching contribution for their 401 (k) plan, try to save at least that amount.

Carefully consider your investment options and pay special attention to pre-packaged target date funds. These funds make it easy to choose your investments and adjust over time as you approach retirement.

7. Have a debt repayment strategy, then put it on autopilot

Debt is a necessary evil, but it is essential to control. Keep a current account of your debts and prioritize your repayment strategy according to your goals.

As stated before, you can make sure that you make your payments on time by signing up for automatic payment. If you are ready to pay off the principal balance of any of your debts, use automatic payment for that as well. Automating your debt repayment strategy ensures that you will stay on track no matter how busy life is.

8. Save for emergencies, even when times are good

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

Resist the urge to use your entire annual pay 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 three months of expenses, treat yourself to a job well done.

9. Know your value and ask for a raise

Even if you are happy with your job, you should always keep an eye on the going rate for the job you are doing. First, compare your current salary with what is reported on sites like Glassdoor. Then track your annual performance review and merit increases just like you would your work deliverables.

Treat your career like its own business and champion your advancement in terms of title and salary. If you are underpaid, develop a strategy to discuss it with your supervisor and ask for a fair rate.

Take the easy road to financial well-being

Many financial decisions take time and deliberation. For example, should you rent or buy? Stay in your current job or pursue your entrepreneurial dream? Invest in stocks, bonds or physical assets like real estate? Choices like these require careful research and thought.

Fortunately, some financial decisions are so clear that they are virtually obvious. So go ahead – grab the handy fruit of the financial world. Once you have made these nine decisions, it will be easier for you to rest.

Image Credit: Kampus Production; pexels; Thank you!

Deanna ritchie

Editor-in-chief at ReadWrite

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

Leave a Reply

Physical Address

304 North Cardinal St.
Dorchester Center, MA 02124