Six Financial Decisions You Should Make (Beyond the Obvious)
We’re approaching that time of year when we’re all looking forward to a clean slate, a new year, and the opportunity to finally get our act together with some serious, win-win New Year’s resolutions . For many of us, this means a set of money resolutions designed to right our financial ship. And while the most obvious financial decisions—like creating a budget , saving more, paying off debt—are all good ideas, there are also many less obvious financial decisions that you may not have even considered.
These overlooked financial decisions aren’t the first thing you think about, but each one can have a real, measurable impact on your financial health in a variety of ways. So as you review the latest version of your financial resolutions this year, consider adding a few to your list for maximum impact.
Maintenance of your property
If you own property and don’t have a comprehensive maintenance plan in place, you’re exposing yourself to financial hardship in the form of large future expenses. Deferred home maintenance has a measurable cost , and tackling maintenance and repair issues incrementally is much more manageable than dealing with annual emergencies like replacing a roof or replacing rotten siding, which cost tens of thousands of dollars. Deciding to maintain your property properly will have a positive impact on your finances.
Audit of your subscriptions
It’s so easy to sign up for services and then simply forget about them—and those zombie subscriptions can cost you a lot of money over time. So decide to audit these subscriptions and consider which ones are useful and which ones can be cancelled. There are tools that can help you analyze these expenses, but the key is to make the decision first. This resolution can also help with other financial decisions because it frees up money that could be used to build an emergency fund, reduce your debt, or increase your savings.
Coverage Review
Many of us buy insurance when we need it and then forget about it, paying premiums and not thinking about it until we need to file a claim. But you should decide to review all of your insurance coverage this year – check that you can pay lower premiums (either by changing insurers or by correcting the information on your CLUE report ) and that you have the correct amount of coverage for each aspect . your life (consulting with an insurance professional may help if you are unsure how to determine the right level of coverage). You should also make sure that your beneficiaries do not need to be updated and that you are not paying for passengers or additional insurance that you no longer need.
Fighting inflation
Today we are all painfully aware of inflation and its impact on our lives. Yet we tend to view it as a force beyond our control. This year, resolve to take inflation into account—increase your savings and income goals by an inflation-adjusted amount. Tracking the rate of inflation gives you an idea of how much more expensive things will be (or how much less of them your money will buy) so you can prioritize needs over wants. This is important information you can incorporate into your decision-making process instead of being blindsided when your grocery budget suddenly skyrockets.
Understand the value of your time
Here’s a solution: value your time. Literally. When you go to work, you are selling your time, not just your skills or experience. Your skills or experience add value to your time, but time is what you ultimately sell. This means that your time has an hourly rate attached to it, whether you realize it or not. Take a moment to figure out what that rate is (if you’re not paid hourly , start with your annual salary and divide it by 2080 to get a very rough idea).
Now you can think about every thing you do in terms of the value of your time compared to the rest of your life. If your job typically pays you $25 an hour, this figure will help you understand whether you are using your time wisely or whether someone is taking advantage of you. Don’t hesitate to give yourself a raise if you’re absolutely sure you’re underpaid at work, but also make the decision to find a new job if that’s the case.
Clean up old assets
This year, resolve to take a hard look at assets you may have forgotten. Checking your unclaimed property doesn’t take long and may remind you of an old account you forgot about. And if you have a bunch of old 401(k) accounts left over from old jobs, this is the year you need to decide to clean up the mess.
Even if the amounts in these accounts are small, it’s worth claiming and rolling them over for a number of reasons: The money may add up to more than you think, and leaving these accounts under employer control is no longer a recipe for financial success. Plus, you’re leaving money on the table. At a time when 28% of the country’s population has no retirement savings, you may need every penny of that money.