A bucket list is a list of things people want to do before a certain age, retirement, or before they die. Some bucket list favorites include traveling to an exotic destination, or attempting a crazy feat like skydiving. What is not as popular but very necessary, is creating a financial bucket list or a list of financial goals to accomplish during your lifetime.
It is important to ensure that you have sound and stable finances while you’re working, during retirement and after you’re gone. So, we’ve created a financial bucket list for you. Adding some or all of the tips below to your own bucket list will give you and your family the security you need now and later.
Pay off Debt
The less debt that you accumulate will lead to a less stressful life for you and your family. Try to pay off credit cards, car, student, and any other personal loans. Additionally, start looking at paying off your home sooner than the term of your mortgage (especially if you are not subject to a prepayment penalty). Paying off your mortgage early can save you big money in interest; so, look into refinancing your mortgage to a shorter term or pay more money toward the principal.
Secure your Child’s Academic Future
Having a savings account for your child’s future academic endeavors is a great start. However, make sure you’re getting the best yields for your money. One way to start saving for educational expenses is to open an academic savings plan such as a Coverdell Education Savings Account or a 529 Plan. Contributions made to both plans are not tax deductible; however, withdrawn earnings used for qualified educational expenses are tax-free. Be sure to consult with a tax advisor for further information regarding tax deductibility.
Fund an Emergency Stash
Life is unpredictable and unfortunately, emergencies happen. Be prepared for anything by always having an emergency fund to draw money from when needed. Consider opening a high yield savings account and contribute a portion of your paycheck to the account monthly. Most importantly, establish what constitutes an emergency. For example, a new gadget hitting the shelves is not an emergency purchase; however, needing to replace the transmission in your car may be an emergency.
Make sure you have enough life insurance to fill your needs and any debt left behind as well as your final arrangements. Keep in mind that the sole purpose of life insurance is to replace your income in the event of your death, so that your spouse and or dependents can maintain their current lifestyle. Because there are many factors to consider when purchasing life insurance, consult with a professional to ensure you have adequate coverage that suits you and your family’s needs.
Start a legacy of giving to those in need. By making a donation to a worthy cause like the PenFed Foundation you get the satisfaction of helping someone else achieve their financial goals—what a great feeling! Best of all, your donation can be tax-deductible, but be sure to consult with a tax advisor for further information regarding tax deductibility.
Save for Retirement
Saving for your retirement is one of the most important financial decisions you can make. If you have a 401(k) plan with your employer, at least contribute up to the amount your employer matches, otherwise you leave free money on the table.
If you have an IRA, a Roth IRA or both, contribute as much as you can afford. If possible, try to max out your contribution. Remember, monetary sacrifices now will leave you less stressed and able to retire comfortably later.
Having a will in place gives you the ability to control who inherits your home, possessions, and most importantly the responsibility of caring for your children. These decisions should not be left up to the courts. Seek a professional estate-planning attorney and get help drafting a will. You can also draft your own will using online tutorials but it’s always best to have a professional look it over to ensure everything is covered.
The Takeaway- No one works or lives forever. Take the time to get your finances in order so you and your family are prepared for the future.