Knowing what you don't know—but should—is a key first step in improving your personal finances.
For example, what's your mortgage rate? In a new Bankrate.com survey of 1,000 consumers, 35 percent said they "aren't completely sure." Not knowing that information is problematic, said Greg McBride, senior financial analyst at Bankrate.com. "That's your cost of borrowing," he said. "It tells you when to refinance." If you don't know your rate, that savings opportunity might pass you by.
Experts say there are a number of similar questions that consumers ought to be able to answer offhand about their personal finances--but often, can't. Figuring out the answers can help you make smarter financial moves:
1. Am I being paid fairly?
"Everyone should understand their worth in the job market," said Lydia Frank, editorial director for salary estimator Payscale.com. Knowing what other people at your skill level are being paid tells you what salary to request while job hunting, and when to ask for a raise at your current job. The answer might surprise you. "It's not always that you need to march right out and ask for a raise," said Frank. "We find that a lot of people believe that they're underpaid and are not." If that's the case, it can provide a measure of comfort—or maybe impetus to boost your skills and justify an increase.
2. How does my homeowners' (or renters') policy value possessions?
The key terms to look for are cash value or replacement value, said Loretta Worters, a vice president for the Insurance Information Institute, an industry group. The former costs less, but only reimburses you for the item's current, depreciated value—which may not be much. "A couch today is $2,000 or $3,000 for a decent one, but if you've had yours for 10 years or more, you might only get $100, because it's old," she said. That valuation is an important distinction when comparing policies and deciding when to file a claim, whether you need to replace one stolen item or a whole household's worth damaged in a fire or natural disaster.
3. What are the terms of my mortgage?
Learning your rate is important, but so are the terms. "Prior to the housing bust, fewer than 40 percent of homeowners knew what type of mortgage they had," said McBride. If it's not a fixed rate, he said, "then you want to know how much your current rate can change and when." That can help you avoid a surprise spike in the bill when an adjustable-rate product resets, or decide when it's appropriate to refinance to a different type of mortgage.