By Jim Blankenship
However much you make or save now doesn’t promise you a bright financial future. Life is unpredictable. Follow these 10 tips to prevent you and your family from money troubles.
1. See a lawyer and make a will. If you have a will, make sure it is current and valid in your home state. You and your spouse should review each other’s will, ensuring that both of your wishes can be carried out. If you are divorced and remarried, update your beneficiary designations. Provide for guardianship of minor children, and establish education and maintenance trusts.
2. Pay off your credit cards. Almost 40 percent of Americans carry credit card debt. This is not good for your financial future. Create a systematic plan to pay down your balances. Don’t fall into the “0 percent balance transfer game”, moving debt from a higher-interest credit card to a lower-interest one. It hurts your credit score, making it harder to get loans and insurance at a good rate. You can avoid an unpleasant increase in your insurance rates by managing your credit wisely.
3. Buy term life insurance equal to six to eight times your annual income. Also consider purchasing disability insurance; think of it as “paycheck insurance.” This is primarily true for younger folks who have financial obligations to cover with future income. Stay-at-home spouses need life insurance, too. Most people don’t need a permanent policy, such as whole life or universal life, but each family’s needs are different. You should review your situation carefully with an insurance professional (preferably two or more) before making decisions.
4. Build a three-to-six month emergency fund. This keeps you from having to charge up your credit cards when life‘s emergencies strike. In the interim, before you build up your fund, you can establish a home equity line of credit, which allows you to borrow money against your house – this can take the place of part of your emergency fund.