3 Personal Finance Decisions that Strongly Affect Your Money

Money decisions occur everyday and it’s up to you to make the best financial decisions for your future. Whether it’s a financial decision to bring your own lunch to work (approx $2.50), or dine out with co-workers (approx $18.00), each day you have the choice to make the best financial decision for you and your financial future. To help you get through some of those financial decisions The Week has come up with three personal financial decisions that could strongly affect you and your future money.

1. Signs you should keep renting
Trying to decide whether to rent or buy? asks AJ Smith at Credit.com. While the homeownership decision is “ultimately personal,” there are a few things to consider before taking the plunge. “If you don’t have an emergency fund yet, or if purchasing a home would drain all of your savings, you probably aren’t ready.” Besides a down payment and a mortgage, “homeownership comes with expenses” like repairs and improvements, so basic safeguards, like job security, are key. “If you are unsure whether you will have your job for the next few years, you may want to wait.” And before you rush into buying, do your research and “learn what you can about the local housing market, including the price trends, the school district, and the property taxes.”

2. Be smart with rebates
Don’t blow your tax refund, says Gene Kosowan at Digital Journal. If you’re getting money back from Uncle Sam this year, be sure to “get the biggest bang out of those bucks.” The best thing to do is sock the money away in a retirement account. But if you are going to spend it, why not pay down your debt? Some experts suggest attacking high-interest debts first, but others advise taking “the path of least resistance” by prioritizing lower-rate obligations. You should also consider using part of your return to set up an emergency fund. For homeowners, investing in your property is a smart move. You’ll improve your current space and get “a higher resale price on the home once you decide to relocate.”

3. Vetting alternative funds
If your financial adviser is suggesting “alternative” mutual funds, start asking questions, says Linda Stern at Reuters. As “a catch-all category,” alternative funds can be slippery, and can refer to everything from “real estate partnerships to mutual funds that mimic hedge funds.” If your planner recommends one, it’s important to get a few things straight before buying in. First, ask why. Is investing in alternatives meant to “calm your portfolio during bad times or to add extra income?” Then ask how, as in “How will the fund accomplish its stated goal?” Next, “find out who the manager is and what she or he did before.” Were they a hedge fund manager? How did they do in 2008 and 2009? And lastly, check the cost. Alternative funds can be pricey, and since some advisers earn commissions for selling certain products, it’s “worth asking how much more you’ll get for your money.”

Remember, each day you have the authority to make financial decisions. And even the smallest decisions today could strongly affect your future with money.

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Source: The Week

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