We’ve all heard the saying ‘ignorance is bliss’. When it comes to personal finances, though, it is certainly not the case. While we may want to bury our heads in the sand rather than pay attention to percentages, acronyms, and small details, it rarely ends well. Few of us enter adult life prepared for all of the decisions that we will need to make. Financial choices and their consequences are some of the biggest among those.
If we are lucky, we learn as we go along, gain experience, and make sure we get informed before making significant choices. You don’t need a degree in finance to make big purchases and sound investments, but a little knowledge will certainly make life easier. We’ll take a look at the life-changing financial decisions that many of us encounter and point you in the right direction to prepare for them.
When it comes to establishing the life we want to lead and guaranteeing some security and comfort, most of us look to owning a roof over our heads. More than a house, we seek a home to retire to at the end of a long day and a place to enjoy the company of loved ones.
Buying your own home usually involves the prospect of a mortgage. Here financial knowledge will help you to understand the commitment you are making. Once you are prepared to move forward with using a mortgage to purchase a home, you need to be ready with the right information to choose the right product and company.
We class insurance as an invisible financial decision because you won’t necessarily think about it until you really need it, and more often than not, that is too late. Weighing up the choices of paying for something that will cover events that may or may not happen requires some educated guesses.
The decision doesn’t end with deciding you need insurance. What you need is just enough knowhow to discuss the matter with an expert. Once a company has explained the types of insurance available, what they cost, and what they cover, an understanding of what you can afford and what you need will help you to make an informed decision.
The basic idea of investment is that you will put away some money now with the hope of future benefits. Without any financial knowledge, investment can seem a very daunting topic. While you don’t have to dabble in the stock market, one fundamental investment should be on your radar: your retirement plan. Making yourself aware of the options available is never too early; it is one of the most important informed decisions you will ever make for your future.
All in All
Even if you only prepare for these financial decisions in the days and weeks leading up to your choice, facing financial responsibility will be one of the most freeing and enabling experiences of your adult life.