How to Get Financially Prepared

Obviously no one can predict when a life event will occur: divorce, death of a spouse, forced retirement, or job loss. But being prepared financially for whatever happens can be one less trauma to deal with during a difficult time.

Women are traditionally kept out of most conversations and transactions relative to money until they have to be included. Often those transactions and conversations require a translator so women can understand what is going on. And if this happens at a time with tons of stress involved, it’s a recipe for disaster.

Learning about money is not difficult. It’s only difficult if you think you will master it in five easy lessons. The probability of that happening is slim.

Take some time when you are not stressed to find out how you can take some baby steps to increase your understanding of the language and how to put it into practice in your daily life.

For instance, most people who own a home have a mortgage. The mortgage documentation can be totally intimidating to anyone, let alone someone who was asked just to sign on the dotted line. I’m not saying you should take it all out and read through it, (ok if you’re an insomniac, maybe) but that you might want to arm yourself with some basic information about it, like the term of the loan (10, 15, 25, 30 years), the interest rate of the loan (fixed at 5%, variable at the prime rate plus some figure, or some other configuration) and the monthly payment for the principal of the loan and the interest on the loan.

The monthly payment you send to the bank may be different than the monthly payment you could see on the original mortgage paperwork. That’s because the monthly payment you send could include some other nasty stuff, called escrow, composed of a fixed amount for your property taxes spread out over 12 months, your homeowner’s insurance spread out over 12 months, and monthly mortgage insurance premiums if your down payment was less than 20% of the value of the house when you bought it. If you don’t feel like pulling out all that paperwork, call your bank and ask them to help you figure it out. They would be delighted to do so.

Just knowing this would make you feel far more confident in your ability to know more. Knowledge is power. So start getting powerful!

Photo Credit: Nuiiko via Compfight cc

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