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Actions Fall in Love With Your Finances
Key Takeaways
- Position yourself for a promotion or new job to boost your income.
- Get more out of your investments by contributing to your 401(k) or IRA and check fees.
- Protect your livelihood and your loved ones by getting insurance.
Like a marriage, your money requires regular attention. Just as your spouse or partner won't appreciate a “set it and forget it" approach to the relationship, your money won't flourish without a little TLC either.
Here are some tips to help you foster a healthy relationship with your finances.
Position yourself for a promotion
While clipping coupons and comparison shopping can save a little cash, boosting your earning power is likely to have a bigger impact on your bottom line. Find out what courses or certifications could help position you for a promotion, and set aside time and money to boost your skills. Some employers have professional development dollars available to send employees to conferences or pay for relevant coursework.
No love from your current company? Shop the market to see if you might be able to command a higher salary or better benefits elsewhere. Having a written offer elsewhere may place you in a better position to get more attention from your current employer. Maybe they'll bump up your salary or promote you so you won't kick them to the curb.
With unemployment at a record low — the Bureau of Labor Statistics reports that unemployment was at 3.7% in October 2018, compared to 4.1% in October 2017 — now's a good time to be a job-seeker and test the market.
Get more out of your investments
Saving money only gets you so far. Smart investing can help you reach your financial goals faster. Although it is possible to lose money while investing, historical data shows that over the long-term, investing results in higher gains than simple savings.
If your employer offers a 401(k) retirement plan with a match, that should be the first place to invest. Some companies will match up to a certain percentage of your contribution; not taking advantage of that is leaving money on the table. As with all investments, it's good to review your holdings now and then.
Another way to rev up your investments is with an Individual Retirement Account (IRA). If you don't already have an IRA, consider opening one. Traditional IRAs offer an immediate tax benefit since the money you put into them may be tax deductible, depending on your income and whether or not you're covered by a retirement plan at work. Roth IRA contributions are after-tax, which means you don't have to pay any more tax when you make withdrawals.
Whether you invest in mutual funds or exchange-traded funds (ETFs), take a close look at your expenses. High fees and expense ratios can eat away at investment gains, so if you're unsure, ask your investment professional what fees you're paying and if there are lower-cost options available.
Protect your loved ones
If something happens to you and your family couldn't rely on your income, you wouldn't want them to have to sell the house or forego college. Not only would they have to grieve over you but they may have to face some unpleasant financial realities. Insurance can help protect loved ones in times of crisis.
In the case of your premature death, life insurance could help your family pay for funeral costs, educational expenses, the mortgage, or otherwise replace your income. Term life insurance covers your beneficiaries for a specific time frame. For instance, if you purchased a 20-year term when you had small children, they would hopefully be financially sufficient adults by the policy's expiration date. Even stay-at-home parents need life insurance because replacing all the work they do (childcare and household tasks, for instance) would be expensive.
Disability insurance replaces a portion of your income in the event that you become disabled and unable to work. Nobody wants to think about dying or becoming disabled, but planning for these unfortunate possibilities and providing peace of mind can be an act of love towards your family.
What you can do next
Set up regular money dates to review your finances and set goals. If you're coupled up, you and your spouse should discuss money regularly. Your goals and spending may evolve over time and you'll want to get on the same page. Money talk may not be as romantic as pillow talk, but both are important to the health of your relationship. If you're single, you should still set aside time for solo money dates when you can review bills, set goals, and plan for the future. Consult your financial professional regarding your circumstances.
Susan Johnston Taylor has written about personal finance and business for The Atlantic, The Boston Globe, Fast Company, and U.S. News & World Report.
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