Top 5 Financial Planning Tips: Are you prepared?
Are you prepared if you lost your job? If your spouse was injured? If you have a family emergency?
All of the scenarios above will impact your personal financial plan, but too often it is left neglected or moved down on the priority list until something happens to shake things up. We’ve summarized 5 tips below to help you with your financial plan and prepare for every situation.
5. Have you updated or prepared a will?
Most adult Americans do not have a will. Wills do not necessarily have to be complicated, but EVERY adult should have one. It is best to have one drawn up by a lawyer rather than doing it yourself.
4. Are you adequately insured?
Life insurance can guard against the need for your family to make drastic changes to their plans should the unexpected occur. In most cases, term life insurance is the preferred method to cover liabilities and future expenses for surviving family members. Disability insurance is often over looked. Long-term care insurance has changed significantly over the past several years but is still worth of consideration to protect your assets. If you have substantial assets, you may also want to consider umbrella insurance (excess liability coverage), not to protect against a rainy day, but to kick in if the liability limits in your homeowner’s and auto policies are exceeded.
3. Do you have adequate emergency reserves?
In the case of a sudden accident or medical emergency, do you have at least three to six months’ worth of cash or immediate access to liquid investments? These could be in the form of money in a checking account, certificates of deposit, or very short-term bond funds. These funds could pay expenses while you are occupied handling the emergency.
2. Are you managing debt properly?
If you have a mortgage, have you refinanced for a lower interest rate? Even if you could purchase a home for cash today, it may make sense to take on a mortgage as long as you itemize your deductions and the amount of interest in in excess of the standard deduction. If you have high interest credit card balances, perhaps a line of credit at a lower rate would make more sense than carrying those balances.
1. Are you aware of all of your annual expenses?
When people are asked to estimate their monthly or annual expenses, mot underestimate and often to a great extent. Taxes are one large expense that many neglect to account for as well as healthcare, vacations, and miscellaneous expenses such as toiletries. Consider creating a budget to help manage your finances.
Do you have questions about your personal financial plan?