I was 16, and I wasn’t psyched to be calling up auto-insurance companies on my family’s wireless phone â€” not mobile or cellular, mind you. This was one of those landlines that had to charge on the wall but wasn’t as cumbersome as the corded phones, which confined you to the other end of the kitchen at best.
As I sat on hold, head in my hand, arm dramatically draped across the table, I cranked up the internal drama. We all knew tacking me onto their insurance policy was going to be the cheapest option, but they were still forcing me to shop around.
When I was done, I had confirmed what I believed at the beginning of the process: Adding me to my parents’ auto-insurance policy was going to be the cheapest option. I had to present my findings to my parents, which I begrudgingly recognized as a helpful exercise in real time. It forced me to intimately familiarize myself with the data. Because I understood the information thoroughly enough to present it, the lessons stuck. Here’s what I learned (and still apply to my life as an adult):
Ask how often premiums are due
There was one insurance company I called that quoted me a price that truly was 15% below the competition. I couldn’t understand it. I probed and prodded until I finally found out that while premiums were 15% lower, they were charged three times per year rather than the semiannual quotes I was getting from all other insurers.
If something sounds too good to be true, it probably is. I learned that day to always search for the catch.
Compare apples to apples
With any insurance product, it’s important to compare policies apples to apples. That means going down your declaration (dec) page, which itemizes each area of coverage. It’s usually the first page of your policy and, for auto insurance, will typically include collision and comprehensive coverage with further delineated line items. The specific line items that are mandatory for your policy will vary depending on your state of residence.
By comparing identical policies with different insurers, I could easily tell which one offered the best deal. Getting familiar with the list on that dec page was instrumental in the shopping process.
Building confidence in my financial abilities
At first, it was daunting to stare that list down, but after a few phone calls, I felt confident that I understood the product. Each call was shorter than the last as I learned exactly which questions to ask. I knew the product well enough to tell when there was an attempt to manipulate me because of my gender or age. The knowledge I had attained gave me the upper hand in the conversation.
The confidence that experience gave me has allowed me to make far fewer mistakes when purchasing financial products than I would have otherwise. I am capable of understanding the pricing of complex policies, so I feel I am capable of tackling other areas of personal finance â€” even if they seem difficult at first. Once I came around to the idea of investing, I was confident I could do it if I simply researched enough. Back when I filed a simple tax return, I didn’t run to hand my money to a big-box tax preparer. I felt confident enough in my abilities to learn how to do it myself for zero dollars.
That’s not to say I never mess up with my money. We all make mistakes from time to time. But I am confident enough to perpetually strive to learn and do better. Because my parents, to my teenage chagrin, showed me that I could.
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