New York, NY (PRWEB) November 30, 2004
IÂve found that it can be tremendously helpful for building out a financial roadmap to think in terms of financial milestones. These are all the events in your life that will require you to make serious decisions that may affect your entire financial future.
There are many financial milestones that you may face--buying your first home, the birth of a child and changing careers, divorce or the death of your spouse are but a few examples. Some may be expected, like the death of your parents, while others may strike out of the blue, like receiving an inheritance from your long lost cousin.
We recently asked members of the Armchair Millionaire community to weigh in on which financial milestones are most important. Here are two of the comments we heard:
ÂThe most important financial moments in life are the birth of a child, getting married and buying a home--in that order.Â --UMI
ÂAn important financial milestone for us was several years ago when my husband fell down our basement steps and was out of work for four months. He didn't have disability insurance. Luckily we didn't go into debt, just drastically cut down our expenses. This was financially much harder for us than buying a house or having a baby.Â --YJ
The secret to successfully navigating your way through lifeÂs financial milestones is simply to be prepared. Think of financial preparedness the way you might think of a first aid kit: You stock it up with everything you might need in an emergency, and then hope that youÂll never need to use it. Use my checklist to stock up your own supply of financial preparedness.
The Armchair Millionaire's Checklist of Financial Preparedness
Organize your stuff. Whether you're faced with an audit by the IRS, an accident that requires an insurance claim, or a complicated loan application, the last thing you want is to have to turn your home inside out in search of the needed financial records. Set up a basic, easy-to-use filing system, and commit to keeping it up to date.
Educate yourself on the basics. Having a baby? Educate yourself on life insurance and college funding. Preparing to leave a job? Find out about your options with your 401(k) plan. Buying your first home? Inform yourself about how mortgages and the real estate buying process work. For starters, go to the archive of Ask the Armchair Millionaire articles on http://www.armchairmillionaire.com--they cover virtually every milestone you may encounter.
Have some cash or credit in reserve. There are few milestones when you won't appreciate having a cushion on hand to deal with the unexpected. I always recommend that everyone have a cash emergency fund equal to at least three monthsÂ of expenses. In addition to that, consider keeping a home equity line of credit open with your bank.
Have a pro for backup. Some financial milestones in life almost demand the assistance of a professional--most notably, when you receive a large lump sum (such as from a retirement plan payout or an inheritance), face a tax audit or prepare your will. If you don't already have relationships in place with the appropriate investment, insurance or tax professionals, solicit references from friends or family members who do.
The Bottom Line: We all face financial milestones. The difference between dealing with them successfully and not-so-successfully is often how well you have prepared. By taking a few common sense steps, youÂll be well set to meet the financial challenges life will throw your way.
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Lewis Schiff founded the Armchair Millionaire Web site in 1997. His first book, The Armchair Millionaire, was published in 2001. Schiff's newest report, "How to Know When You Are Rich," is now available at http://www.armchairmillionaire.com.