Guest post by: financiallywell.info
You may be caught up in the current financial demands of your daily life, but it is important to begin planning for your future now. If you want to be able to retire someday, your Social Security - and Supplemental Security Income, if you are affected by disability - will unlikely be enough. If you’d like to help put your children through college, the cost of tuition is becoming more expensive every year. If you are chronically ill or disabled, medical care is extremely pricey. All these life events are important, and each of them requires intentional saving to cover the costs.
Save For Retirement
You are never too young to begin saving for retirement. In fact, the younger you are when you start saving, the more money you will yield in interest overall. According to NerdWallet, you should aim to save at least 10% to 15% of your income to invest toward retirement. The more you can set aside now, the better off you will be in the future. Traditionally, people choose to invest in a 401K or IRA (traditional and ROTH) account. If you are unsure which to choose, you can find a financial advisor to help you make the best decision with your money. Not only will you be funding your future, but you can also file tax deductions for some of the contributions resulting in a tax break now.
Save for College
It has become the new norm for most kids to attend college after they graduate high school. While not necessary, there are many advantages for your child to acquire a bachelor’s degree. Unfortunately, according to USA Today, the cost of tuition is rising every year and becoming unaffordable for many families, resulting in amassed student loan debt. Like your retirement fund, the sooner you can start saving, the more money you will accrue in interest over time. There are several accounts designed specifically to save and invest toward education. Accounts like 529s have additional benefits, such as tax-free withdrawals when used for education, as well as tax deductions and credits for contributions.
Prepare for Future Long-Term Care
Inevitably, there will be a point in your life where you are unable to care for yourself, and you will need to determine your long-term care options. Unfortunately, if you have waited until that day comes to begin planning for it, you will likely find yourself unable to afford the care, and possibly, unable to make the best decision to begin with. This may result in burdening your children with making difficult care choices and financially supporting you. To avoid this, begin looking into your long-term care insurance options early. Purchasing coverage in your 40s can save you up to half the monthly payment compared to purchasing in your 60s. If you are affected by a disability, then you may want to discuss with your doctor the best care option and timeline to plan for.
Don’t Forget a Safety Net
Speaking of insurance, now more than ever is the time to make sure you have a life insurance policy in place for you and your spouse. Doing so ensures that your family will be cared for in the event of your death, and that money can go a long way toward covering things like funeral costs, outstanding medical bills, debt and especially lost income. For many people, a 30-year term policy is the sweet spot, since it provides coverage for a longer amount of time, bringing more peace of mind for young families with 30- and 20-year mortgages to cover. Shop around for rates and take note that these days you can even purchase life insurance online. Another option worth considering is funeral insurance.
While on the subject of insurance, funeral insurance could also be an ideal expense. It may seem premature to talk about funeral planning, but it’s worth noting that the average cost of a funeral ranges $7,360. To avoid adding a financial burden for your family if you are to pass unexpectedly, look into burial insurance, which can also help offset medical bills and outstanding debt, in addition to helping keep your life insurance available for things like mortgage payments and college funds.
Creating Extra Money in Your Budget
All these areas are important to begin saving for as soon as possible, but how do you find the extra money to put aside when your budget is already maxed out as it is? There are a few practical options to help you find extra money in your budget. You can assess your current bills, and see if there are savings to be found by reducing your cable package or cutting your food bill by clipping coupons. You could even downsize your home to reduce your monthly payment. However, you need to make sure that doing so is the right decision for your family in the long run. Will your family all fit in the new home? Do you need to sell some of your furniture and belongings in downsizing? If so, that may be a great way to save several hundred dollars to put toward your future.
No matter your age, you can start preparing for your financial future now. Whether planning for retirement, your children’s education, or your long-term care, your family will thank you for your efforts, and you can rest assured knowing a successful plan is in place.
This is a guest post by: financiallywell.info
After working more than two decades as a full-time Certified Public Accountant (CPA), I decided to compile all of the knowledge I’ve accumulated about taxes, personal finances, and general financial literacy into one place: I’m writing a book! I’m thrilled to announce that my first-ever book will be released in early 2018. I hope it will help people of all backgrounds, incomes, and walks of life find success in their financial journeys.
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