How to protect your money and secure your financial future

Your financial security, and your family’s if you have one, is surely one of your greatest concerns. Here are some tips to safeguard what you have and make your economic future a bit less uncertain.  

Safeguard your financial future with just $200

An important part of building high net worth is protecting what you have and avoiding disaster and many times there are a number of things you can do that are not expensive. 

Here are some ways to safeguard your financial future for $200 or less.

1. Get renters or homeowners insurance

You can protect nearly all of your belongings from theft, fire, and many other misfortunes by paying a monthly insurance premium that is often less than $200. If you rent, protecting your belongings is even cheaper: renters insurance is available for less than $20 a month.

2. Contribute to a retirement account

With a Roth IRA, you can contribute up to $5,500 each year and invest in almost anything. Since money contributed to a Roth IRA is taxed upfront, all future withdrawals are tax-free. A $200 monthly contribution over several decades could result in $1 million or more when you retire.

You may also choose to contribute to a 401(k) plan if your employer offers it. Investing $200 per month, or 6 percent of your income, and having your employer match half that would come to $3,600 annually.

3. Get a life insurance

Life insurance will replace the lost income if your spouse passes away (or you do), and it's not very expensive to have a policy. In most cases, you can get a very good life insurance policy for under $200 per month. Inquire about life insurance in order to protect your family; it may be a lot cheaper than you think.

4. Ask for financial advice

There are fee-only advisers who would charge $200 for an hour or so, which is the time it would take to get some basic financial advice and determine if you are on the right track. 

Protect your finances in an uncertain economy

Reading the financial news, it seems the economy is starting to recover and we may be able to elude a recession. However, preparing for the worst may give you peace of mind now, and avoid trouble later on. Here are some tips you should follow.

Strengthen your emergency fund

Financial experts recommend that everyone build an emergency fund that could cover six months to a year's worth of expenses. Your emergency fund can get you through a period of unemployment till you find your next job.

However, losing your job during a recession, when the economy as a whole has taken a hit,  can make the period between one job and another much longer. 

So, while you still have a job, is an excellent time to add to your emergency fund. Start an automatic transfer to your savings account with every paycheck, and look for other ways to cut down costs and put that money towards your fund.

Try yo pay your credit card debt

Now is a great moment to get aggressive with your payoff plan, if you have a credit card debt. Carrying debt into a recession could bring major financial trouble if you lose your job or have a lower income during that time. 

Go to the doctor

The cost of health care can be prohibitively expensive, even for Americans with health insurance. This is why it's a good idea to schedule a checkup with your doctor now. Getting a checkup while you have employer-sponsored coverage in place may head off any potential health (and financial) problems.

Maintain your regular investments

It can seem counterintuitive, but during a recession, you probably don’t want to stop your regular contributions to your investment accounts, whether that’s your 401(k), Individual Retirement Account (IRA), or a taxable brokerage account.

While it can be stressful to put money into a downward-trending market, it allows long-term investors to benefit from what are essentially sale prices on investments. 

You may think you could game the system by taking your money out of the market at its high and then reinvesting it when it hits its bottom. But timing the market is notoriously hard to do and can drastically damage your earnings if you miss days when the market makes large gains.

If you're close to retirement, make sure you have cash

The only caveat to leaving your investments alone is if you're on the verge of retirement. If you're still entirely invested for the long term, you may find yourself retiring, but unable to access your retirement income because it has taken a recessionary hit. 

If, in the next few years, you'll need to live off the money that's currently invested, then make sure you transfer some of your investments into cash equivalents. These will remain stable and available for you even if a recession hits just as you're ending your career.

Safeguard your child’s financial security

If you are a parent, your child's financial future is surely one of your main worries. Financial planning will help you raise funds for college and any emergency that may happen. Here are some tips to help you achieve this.

Statistics indicate that 83% of Americans can’t pay for college, Millenials earn 20% less than the previous generation, less young adults own their own home, and only 25% are financially independent at the age of 22. 

All these facts make parents very concerned about the financial fate of their children. Here are some ways of making the future less uncertain.

Opening an Education Savings Account

An ESA (Education Saving Account) will enable you to deposit up to $2,000 annually towards your child’s college tuition. The plan allows the funds to grow tax-deferred. ESA’s aren’t just for college expenses; they can also be applied towards elementary and secondary school costs.

If you plan to invest more than $2,000 every year you may want to consider a 529 plan. It’s similar to an ESA plan except without the annual limit.

Considering A 529 college plan

There are two types of 529 plans; pre-paid plans and savings plans. A pre-paid account allows parents to buy tuition credits for future use. On the other hand, a 529 savings plan consists of mutual funds investments that grow over time. 

Most plans have many investment options. Financial experts suggest funding the account to the maximum amount as soon as your child is born in order to maximize future growth. 

Having an updated will

Creating a will is imperative when it comes to protecting your child’s financial future. You will also need to designate a guardian to take care of your children and name a property guardian to manage your estate if a tragedy occurs. 

Updating Beneficiary Information

Make sure to update beneficiary designation is up-to-date on your life insurance policy, bank and retirement accounts.  It’s important to update this information after major live events such as the birth of a child or divorce because beneficiary Information will override a will, Experts also suggest naming a contingent beneficiary in case the primary beneficiary dies before you.

Opening a custodial account

This is one of the easiest accounts to open. It’s basically a savings account in your child’s name. The account will be accessible once your child turns 18 or 21 depending on their locality. The disadvantage is that the funds are taxable after the first $950.

Talking to kids about money

Children tend to follow their parent's example. The first way to make them aware of the importance of not overspending is not doing so ourselves. Saving and budgeting may be a lot easier for them if they see us doing it regularly.

Talk to your kids about how to manage credit cards, a bank account, and how to budget. Encourage your teen children to get a job and save for what they want instead of handing them over money. Knowledge is one of the best gifts you can give to your child when it comes to money management.


 

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