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MEETING YOUR FINANCIAL NEEDS
The best way to meet your financial needs is to do the following:
Identify Your Needs:
You should identify your financial needs whether they be retirement planning, college expense planning, saving for a home, vehicle or other necessary item.
Plan For Your Needs:
Now that you know what your financial needs are, conduct the necessary research to determine the products or services that are well suited to meet your needs.
Satisfy Your Needs:
To satisfy your needs, you must be able to discipline yourself to save for those needs as well as utilize the goods and services that you need.
Providing For Your Family & Your Future
1) A Family Will
A family will is a legal document that states what you want to happen to your property and children in the event of your death. It is an opportunity to insure that your desires are carried out after your death. Specifically, you can determine to where and in what amount your property will be divided. Further, you can determine guardianship for your minor children and set up trust accounts for their benefit. You also have the ability to choose the person or persons who will be entrusted to carry out your intentions. That person is known as the executor and successor executor of the will.
Each state has differing laws with regard to estates. The best way to insure that your intentions will be carried out is to have a will prepared by an attorney who practices primarily in that area of law. Wills can be contested by family members and others, thus, it is imperative that the will be drafted properly, duly executed and witnessed.
2) Adequate Life Insurance
Life insurance is a method of insuring that upon your death, there is a monetary benefit paid to your beneficiary or beneficiaries. This amount can assist the survivors with benefits which can be used for housing, food, clothing, education and debts.
There are several kinds of life insurance. The two most common forms of life insurance are term and whole life.
Term life insurance is for a very specific dollar amount (i.e. $100,000.00) and for a specific term (i.e. 20 years). No cash value is accrued with term life insurance and the benefit is only paid should you die within the term period. Term insurance is very affordable especially if purchased when the insured is young and healthy.
Whole life insurance is similar to term insurance; however, there is the added feature of cash value. That is one reason why whole life insurance is more expensive than term insurance. The premiums that are paid into the policy are used to pay for the term value of the policy while additional sums are used to make investments. At some point, you have the ability to withdraw or borrow against the cash surrender value.
Do You Really Need Life Insurance?
Life insurance is needed if you have other persons dependent upon you for support. If you are your family's sole source of income, you should insure against anything happening to you which would prevent your family from being without support. Thus, the larger your family, the greater the amount of insurance or death benefit is needed. Without insurance, your family would be at risk of not being able to support themselves. Analyze what your family will need and for what duration in terms of basic living expenses (housing, utilities, food, clothing, transportation, medicine, education, etc.).
Further, as your family grows and circumstances change, you should also review your insurance coverage. The amount of benefit sufficient to care for one child and your spouse is not sufficient should your family size expand.
3) College Savings
Although it may seem like a lifetime away, you need to start planning for college expenses. The cost of a college education has been rising over the past decade at a rate higher than that of inflation. Further, you must consider the room and board costs in addition to that of tuition.
Do not assume that your child will necessarily be able to obtain student loan financing. You must consider the fact that the entire cost may be the responsibility of the family.
There are many different types of savings programs geared toward college expenses. These include Coverdell IRA accounts, savings bonds, and Section 529 plans. A Coverdell IRA is a savings vehicle that allows parents to contribute funds into an account for the benefit of qualified college expenses, which is done yearly and which will grow tax-free. Savings bonds are an additional method of putting funds aside for college expenses. Lastly, Section 529 plans allow for either a lock-in rate for today's tuition costs or a full savings account that can be used at any accredited college or university in the country.
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Budgeting For Skilled Money Management