Manage your money, or your money will manage you.
Deferred Maintenance — I often hear this phrase in relation to home ownership or car maintenance. It's postponing simple maintenance to save money in the short term or from lack of knowledge. An example would be not replacing your brake pads until they are so worn, you must replace not only the pads but the rotors as well.
In home ownership, an example of deferred maintenance would be neglecting to keep exterior paint touched up until the wood underneath has rotted. Now instead of spending a few dollars on paint, you're faced with a much more expensive repair bill to replace rotting wood.
Did you know that deferred maintenance can also apply to your finances? Not taking care of the small details can have larger consequences later on.
Recently I added my teenage son to my auto insurance policy. Because of his good grades, I received a discount. However, when reviewing the most recent bill, I noticed the discount was missing. I called our agent immediately and was able to correct the situation – resulting in a savings of $50. But what if I hadn't bothered to review my bill? At $50 each month, that's a significant amount of money to my budget!
So what can you do to counter the effects of deferred maintenance on your finances?
- Review your statements each month. Review any credit card purchases. Were you charged the correct amount? Are there any unusual charges or discrepancies in amounts? If so, contact your credit card provider immediately. The sooner you act, the easier it will be to correct the situation.
- Review your monthly bills. Before paying your utility bill or any recurring bill, review the charges. Is your water bill amount about the same as this time last month? Are you receiving the appropriate insurance discounts? It's especially important to review your statements if you have automatic payments set up. It's easy to let your statements slide when the money is automatically deducted from your account.
- Check your bank statements. In this age of paperless statements, it's so easy to skip this step. And you shouldn't! Reconcile your bank statements each month. Are you being charged service fees when perhaps you shouldn't? Has your financial institution implemented a new policy that impacts you?
Above all, be an educated and informed participant in your finances. As the saying goes – Manage your money, or your money will manage you.