One of the most important things in life is to find ways to achieve your financial goals. Whether you are aiming to protect your loved ones, to save for your child’s education, or to plan for your own retirement, you should have a road map that will guide you as you save and invest. However, planning for your financial future can be tricky and complicated because there are many things to prepare for and arrange. Sometimes, there are some important things that passes through the cracks and end up forgotten. For example, do you have a big 3!
Here are five things that are invaluable to know when you are starting to plan for your financial future.
Make Sure Your List Of Beneficiaries Is Up To Date
A life insurance policy is probably the first thing most people buy. No matter what age you are, it is always a good thing to keep your loved ones protected in the event of your death. In the past, single people did not make getting a life insurance policy a priority. After all, they were still single and had no dependents relying on them. That’s no longer the case in recent years, and today even young people are buying insurance.
This brings us to the point of beneficiaries. Insurance policies require you to name beneficiaries. You probably did when you first got the policy. However, with the passage of time, your life circumstances change. You get married, have kids, maybe get divorced, or end up with the loss of your parents or spouse. The person named as the beneficiary in the event of your death may no longer be the person you want to receive the proceeds from your policy. Take the time to update your policy with every major life change.
Save Up For Your Child’s Education As Early As Possible
Sending a child to college is very expensive. You have to pay for tuition, books, and your child’s living expenses as well as many other expenses. As a parent, you want to be able to contribute as much as possible so that your child will not have to apply for student loans and go into debt. To maximize the tax benefits and to be able to maximize the growth of your investment, you should start saving for your child’s education fund as early as possible. Ideally, that means as soon as you find out that you will be a parent.
Check Your Risk Tolerance Before Making Investment Decisions
Deciding where to invest your money can be a difficult decision, and there are a plethora of options from bonds to stocks, from mutual funds to foreign exchanges. Each form of investment vehicle comes with an associated risk level. Normally the rule of thumb is that the higher the return on investment, the higher the risk. When choosing where to invest your money, don’t get blinded by the rate of return. Base your decision on how much risk are you willing and able to tolerate. Your acceptable risk is usually determined by your financial goals, your age and your circumstances in life. Don’t invest in an instrument that you are not comfortable investing in-it will just give you an ulcer.
Plan For Your Death As Early As Now
Death is a reality for every human being here on earth. All of us will eventually die. However, you cannot predict when you are going to die. Some people reach their 80’s and die of old age, but some get taken away too early when they are still at the prime of your life. You should get your affairs in order as early as now and just update it as you go through life.
You don’t have to be a billionaire to need a will. In fact, every person should have at least a basic will that would form your estate plan. If you have young kids, you should take into consideration who would take care of them and be their guardian. Don’t leave it too late that the state decides for you. Make sure your family is protected.
Learn Accounting And Taxation Before Attempting To Do Your Own Taxes
If it is too complicated for you, then just leave it for the professionals. This adage definitely applies to doing your taxes, and there are many tax professionals that offer their services. However, they can be expensive. The proliferation of tax software has encouraged you to save on professional fees by doing it by yourself.
Well, if you don’t know what you are doing, you won’t be able to take advantage of all the different tax rules. You might not be able to maximize your deductions. Take online classes or enroll in short course at your community college to learn the basics of accounting and taxation.
These are just some of the ways you can ensure that your financial future is planned well and your financial goals are met.
How are you planning for your financial future?
To add to the risk tolerance one definitely recheck your tolerance as your situation changes and adjust your investments accordingly.
I can’t tell you how often people forget to update their beneficiaries on their life insurance. It really can make a huge mess for people after somebody dies. Sometimes, the ex-wife/husband is still listed as the beneficiary…and they can keep the money if they wish. Bad news…
Eww.. that sucks.
Hi Dominique, I feel the third point should come first. Why because we all invest in business but never think what will happen next. We should not be greedy and not just look at profits, we should also keep in mind that loss can also happen and if this happen than may be your life will spend in just paying the debt and then you will have nothing to spend on your family or business. I have faced this so, always want to advice other to be careful while making any new investment.
Great point. What happened in your business?
Your article is full of good and worthwhile advice. I began getting all of my affairs in order a few months ago and actually set up a folder in my home that can be followed easily by my executor. My attorney also drew up a Durable Financial Power of Attorney that will make it very easy for my son (executor) to take care of all financial and personal affairs.