This is my personal repository for all sorts of useful content (blogs, videos, etc.) to help you better understand not only life insurance, but other financial tools and strategies as well. You can browse through everything page by page, or you can click on any of the categories in the sidebar to narrow the information down to precisely what you’re looking for. Enjoy!
When you’re wild, free and single, you can get away with being a little financially irresponsible. After all, you’re not hurting anyone but yourself, right? But add a spouse and a little bundle of joy or two, and things change. Suddenly, you have responsibilities. Next thing you know, you’re losing sleep at night and you’re sweating bullets every month when the bills arrive.
The good news is it doesn’t have to be that way. Even if you’ve already dug a bit of a hole for yourselves, it’s almost never too late to dig your way out. Here are six smart money secrets to restore financial peace to your family:
Live beneath your means.
This is where the rubber meets the road. This can be tough, but it’s simple. You must learn to spend less than you earn to stay out of debt and save for the future. For example, don’t buy the most expensive house you can afford to impress people that really don’t matter. As a guide, limit your total housing costs to 30% of your household income or less.
Learn to budget.
I can hear you grumbling already! Without a plan, you have little chance of accomplishing your financial goals. If you’re not good at managing the money going out, manage it coming in. Check out the 60/40 budget plan. 60% of your after tax income is used for household expenses. The remaining 40% is divided up into four 10% buckets: Retirement, Long Term Expenses, Short Term Expenses, and Fun Money. If you want to do something fun but there’s no money in that bucket, you don’t do it! The exact percentages aren’t important. What’s important is to set them and stick to them. Make it a habit. Better yet, use direct deposit and scheduled account transfers to automate the process.
Start saving early.
Your two best friends for saving money and building wealth are time and compounding. Set aside $1000 per year at a conservative 5% return and in 30 years you’ll have well over $65,000. Start fifteen years later and it will take over $3000 per year to get there. In other words, cut the saving time in half and you’ll need to set aside over three times as much just to catch up. Imagine what you could do if you saved three times as much AND did it for twice as long!
Get adequately insured.
Insurance is risk management. The likelihood of unexpected death or serious injury to one of you may be low, but the potential impact on your family finances could be devastating. Most advisors agree young couples should have term life policies worth five to ten times their annual income. If that sounds like a lot, don’t be too concerned. Term life insurance is far less expensive than most people realize. (Click here for an instant quote.)
You may have some disability coverage through your workplace, but it could be less than you need. Consider filling any gaps by purchasing more coverage through your employer or on the open market.
Save for retirement.
Retirement may seem like a lifetime away, but it will be here quicker than you think. The later you start, the higher the percentage you will need to set aside. (Remember the part about time being one of your best friends?) It may seem counterintuitive or even heartless, but don’t delay funding your retirement to save for the kids’ college education. At least balance the two. The kids will have more options at college time. You can’t borrow for retirement.
When it comes to finance, you’re both in this together. Leverage your individual strengths to establish your financial roles. I recommend sharing the load in some fashion, but if one of you is going to take the lead, keep the other informed and aware. Money issues are one of the leading causes of divorce in America. That’s not good for anyone.
Believe me, it is possible to live within your means, save for the future, and lead a life worth living. It’s all about balance. It’s about making smart choices and focusing on what’s most important: Raising a happy, healthy family and setting a good example for your children.
Now that’s something worth saving for.
Want the latest tips on creating wealth, health, and a life worth living delivered straight to your inbox?
Subscribe to the Life With Paul blog today...