Money can be scary. Many of us aren’t comfortable with where we are with our finances, and most of us face possibilities we’d rather not think about. It’s easy to just tuck those scary money tasks away and try not to think about them, but that can do us real harm.
It’s always better to face fears, and in many cases facing these tasks and starting to work on them can leave us with less fear.
Here’s a list of important, but scary money tasks to tackle now.
1. Read Your Credit Card Statements
With interest rates on the rise, it can be hard to look at your loan statements to see how much you owe and how much interest you’re paying. This is especially true for credit cards, which typically have very high interest rates.
Roughly 20% of Americans report not checking their credit card statements because they’re afraid of what they might see. However, if you’re ignoring the bill and letting automatic payments handle things, you’re missing out on important information.
First of all, checking your statement is essential for fighting fraud. Your statement contains a list of transactions, giving you a chance to identify errors or fraudulent purchases. The earlier you catch these issues the easier they are to resolve
Looking at your statement is also important for getting a handle on your financial situation. Seeing exactly how much you spend each month, as well as how much you owe, is a key step toward coming up with a financial plan for the future.
2. Check Your Credit Report
On a related note, you should always keep an eye on your credit report.
Over one-third of consumers have errors on their credit reports. Still, many people don’t want to check their credit for fear of what they might find. The problem is, if you never check, you’ll never find and fix the errors that could be dragging down your score.
Even if your credit report is accurate, checking your credit is still a good idea. There are plenty of services that offer free credit reports and many credit card issuers let you look at a copy of your report each month as a cardholder benefit. Your credit report is essentially a financial report card, and you need to know what’s in it, good or bad.
Looking at your credit report and the things that are affecting your score can help you learn about how credit works and decide on a strategy for boosting your score.
3. Talk About Money With Your Significant Other
When it comes to money, it’s important to be on the same page as your spouse, partner, or significant other. That conversation can be a scary money task, especially if you’ve been hiding something or you’re worried about how the other person might react.
What these conversations should consist of depends on the stage of your relationship and the conversations should evolve as your relationship does. In the early stages, it’s important to make sure that you have similar, or at least compatible, philosophies. Talk about money, saving, and spending. It’s also important to make sure you have compatible financial goals and priorities.
As your relationship gets more serious, you should tackle financial issues as a team.
However, the truth is that many people don’t talk about money with their significant other. That can lead to severe problems down the road. In 2021 alone, 2 in 5 Americans admitted to financial infidelity – lying about money to their spouse or partner.
Regular conversations about money can reduce financial infidelity. They’ll also ensure you’re both on the same page, ready to tackle whatever financial situations might come up.
4. Talk to Your Parents About Future Plans
One thing that’s important for everyone to think about is how they’ll handle their parents’ aging. While most people would prefer to act like their parents will be around forever, the fact is that as people get older, they tend to need more assistance with daily life and spend more on medical expenses.
That’s why it’s important to have a frank discussion with your parents about their future plans.
Do they want to stay in their home for as long as possible or do they plan to move someday? Do they want to consider moving to a retirement community or an assisted living facility? Do they have specific plans or wishes for end-of-life plans? How are their wills structured?
These conversations can be very difficult to have, but they’re important. You can get a sense of what your parents will want to do in the future, so you aren’t surprised. They also put you in the position to make difficult decisions without having to wonder what your parents would have wanted.
You might also want to talk to your parents about signing up for a long-term care insurance plan to deal with healthcare costs.
This conversation will also give you time to discuss your parents’ will and estate plans with them. If you have an idea of your parent’s financial situation and how their assets will be distributed when they die, you can avoid infighting among your family and come up with a financial plan.
5. Plan Your Estate
While many people think that you only need a will if you’re old, it’s important for almost everyone to have one.
If you have any sort of financial assets, from bank accounts and investments to real estate, you should have a plan for what you want to happen to those assets should you die. Putting together a simple will can save your loved ones from dealing with complicated probate proceedings.
Start by signing in to all your financial accounts and naming a beneficiary. This will let the named beneficiary receive those accounts relatively easily.
Once that’s done, you can meet with an attorney to draw up a simple will. Try to be specific and clear about what you want to happen once you are gone. This will help your family avoid or at least simplify the complicated probate process. A good attorney should be able to make this process simple.
It’s also important to consider what you want to be done in the event of a catastrophic event that leaves you incapacitated, but alive. Give someone you trust the power to make medical decisions for you. It’s also important to think about more mundane things like who would walk your dog or make sure your bills get paid if you need an extended hospital stay.
6. Consider Life and Disability Insurance
Another important financial consideration is whether you should buy life or disability insurance. These policies can protect you and your family against catastrophe. Nobody wants to imagine themselves permanently disabled or dead, but these things can happen.
In general, life insurance is a good idea if your family relies on your income to pay necessary expenses. For example, if your family relies on your income to help pay the mortgage, a life insurance policy that would cover the remaining mortgage balance could bring your family significant peace of mind.
A term life policy is an inexpensive option if you need protection for a specific period of time.
It’s also important to consider disability insurance. A disability policy can help replace a portion of your income in the event that you get injured or disabled and unable to work. Having this policy can protect you from an unforeseen event that could make it harder or impossible for you to earn a regular income.
Some employers offer these policies to employees as a benefit. You can also purchase disability insurance on your own, so you can shop around for the best deal.
Put the Fear Aside
You may have been dodging one or several of these scary money tasks. That’s natural. Most of us have run away from a problem at some point, and that’s even easier to do when you lack confidence in your own ability to manage these issues.
Many find people find that anticipating scary money tasks is often more frightening than actually managing them. Every journey starts with a single step and confronting the scary money task that’s most worrisome to you might well be the step you need to take your finances to the next level.