Although it is great to have an emergency fund, invest for retirement, and get out of debt, there are some other financial actions that are overlooked but are also a particularly important part of a sound financial plan. Here are some examples:
Get Your Will and Estate Plan in Order
Everyone should have a will – even if you are single and don’t have children. While it is awkward and uncomfortable to think about getting your affairs in order, this can be one of the most loving things to do to help your family ease stress during your passing. It is an unfortunate fact of life, and mere awkwardness should not prevent you from properly dealing with your finances to avoid legal complications. Having a will in place can help loved ones focus on things other than financial issues.
Once again, talking about death is no fun but as the old adage goes, the only guarantees in life are death and taxes. It can be a wise idea to have a term life insurance policy in place that would pay to take care of expenses like kids’ college, weddings, and many others. The beauty is term life insurance is relatively inexpensive. Another important insurance to purchase is disability insurance. Most people don’t plan on getting hurt but life happens. Disability insurance protects you in case you injure yourself and can no longer work. If this were to happen, you would still collect a percentage of your income for a long period of time (usually until death or age 65 – this varies depending on the policy). Most workplaces offer some sort of disability insurance, and this is usually the least expensive way to purchase it. Check with your HR Department to see if your employer offers this benefit or explore the different kinds of insurances and calculate what may be the right fit for you.
Update Your Beneficiaries
Here is another financial move many overlook. Let’s say you started investing in a 401(k) before you got married. When it is time to name a beneficiary, you may have listed your boyfriend/girlfriend. You may have eventually broken up with that person and now, 20 years later, are married and have moved on with life. You may even have an updated will. However, if you did not change the beneficiary on your 401(k), guess who gets this money when you die? You got it – the old flame! The beneficiaries listed on your retirement accounts override the ones listed in your will. Check the beneficiaries on your retirement accounts, life insurance policies, and annuities to make sure they are up to date.
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