Cultivating a sense of financial empowerment doesn’t require that you command a certain salary, achieve a specific net worth or even know all the ins and outs of personal finance. Financial empowerment comes when you feel in control of your financial life, and confident in your ability to make good choices whatever direction it takes.
Here are five financial tips you can put into action to boost your sense of financial empowerment.
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1. Prepare for Surprise Expenses
Most people know the unexpected will happen eventually — yet few plan for it. In fact, a recent Bankrate survey revealed that three out of five respondents had experienced a financial emergency in the last year, mostly due to expenses related to cars and homes, injury and illness; and 41 percent would turn to their savings to pay for it.
Boost your financial empowerment by knowing you can deal with whatever life hands you. This could be through establishing a saving account and setting up an automatic electronic contribution, based on what you can afford, from each paycheck.
When you have money set aside for life’s surprises — whether it’s a flat tire, a broken furnace or a medical emergency, they no longer have the power to send your budget into a tailspin.
2. Avoid Unnecessary Fees
Miss a payment on a credit card? You could be hit with a late fee. 1
Withdraw cash from an out-of-network ATM in the name of convenience and it could cost you nearly $5 on average, according to Bankrate. Ever exceed your allocated data on your mobile phone plan? NerdWallet reports that major carriers charge an average of about $15 for each extra gigabyte.
Fees and charges like these all add up — and they’re all avoidable. Read the terms and conditions for all of your accounts so you don’t have to react to (and pay for) unexpected fees. When you choose where your money goes, financial empowerment will follow.
3. Protect Your Finances
Shop around for homeowner, renter, auto, and health insurance policies, but always remember that it’s as important to have adequate coverage that protects you from major loss as it is to find a competitive rate.
Looking for ways to lower the cost of your homeowner’s insurance? The Insurance Information Institute (III) recommends not lowering the coverage amount on the home; but rather insuring it for the amount it would cost to rebuild, and instead raising your deductible.
4. Leverage Free Money
If your employer will match your workplace retirement contributions, pay for your continuing education and professional development, provide coffee, snacks or meals, or offer to subsidize your wellness with discounted health programs or gym memberships, take them up on it! Financial empowerment is knowing your worth; utilize all the perks an employer is willing to provide.
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5. Monitor Your Credit History and Score
Financial empowerment means knowing what’s in your credit history, and how it impacts your credit score. With that insight, you can make deliberate choices about how to use credit as a tool that benefits your financial life.
Review your free annual credit report(s), and monitor your credit score. The higher your credit score and more positive and established your credit history, the more options you may have when it comes to the types of creditors and lenders you want to borrow from, and on what terms.