It’s tough to get our financial house in order, not because it’s especially hard, but because it’s … boring? Tedious? The last thing we want to spend time on? To remedy that and keep your family safe, here are four tips that you can take on and accomplish:
- Make sure you have life insurance—or enough of it. Do you really need life insurance? Well, answer this question to find out: Would your loved ones suffer financial if something happened to you? If the answer is yes, you need life insurance. Then comes the question, how much?There are a number of factors that go into calculating how much life insurance you might need. But it doesn’t have to be difficult.And don’t let cost—or actually perceived cost—stop you from getting coverage. Did you know that 80% of people overestimate how much life insurance costs? And those under 25 think it’s four times more expensive than it actually is.Let’s frame it this way, say you’re 30 and in good health, a 20-year level term life insurance policy with $250,000 of coverage may cost around $13 a month. That’s the equivalent of a few drive-through lattes.
- Review your life insurance beneficiaries. Would you like your ex-spouse to get your life insurance if something were to happen to you because you forgot to change the beneficiary on your policy?Would you like the money to get tied up in court because you named your minor children as the beneficiaries? These are missteps that happen more than you think. Add to that the fact that people may have more than one policy—for example one through the workplace (a group policy) and one that they bought individually.
- Don’t skip income protection. Many people aren’t really familiar with what income protection is and what it does. Basically, it replaces a portion of your income if you’re unable to work due to a disabling illness or injury. Why is that important?Think about how long you could make ends meet—pay rent or the mortgage and all your monthly bills if your paycheck suddenly disappeared.
- Automate your emergency fund. While not as fundamentally critical as the above tips, this will probably have the most impact on your day-to-day life. Everyone one of us runs into unexpected events that are costly—a major car repair, a leak in the roof, a job loss … the list, as you know, can seem endless.To give yourself peace of mind and bit of cushion, set aside a certain amount each month—it could be $50 or $500, depending on your financial situation—and have it automatically deposited into your savings account. If it’s easier to track, you could even keep it in a separate account.Then it becomes a no-brainer, because that money isn’t there for you to spend. In a year, if you chose one of the above amounts, you could have $600 or $6,000 stashed away!
These tips will set you on the path of ensuring that if the unforeseen happens, you and your family will be OK financially. And what’s worth more than your peace of mind?