York, PA (PRWEB) September 29, 2012
From teenagers to Baby Boomers, and everyone in between, StageofLife.com presents its top ten money tips for consumers to consider as a path towards financial well-being and peace-of-mind. The list is part of the Stage of Life financial literacy initiative.
Tip #1: Make Financial Goals
Establish short and long-term goals, using a goal setting worksheet if necessary, to start planning goals within important areas of one's life such as health & wellness, education, home, community, friends & family, travel, personal missions, and long-term dreams.
The first step for expanding one's financial literacy is to clearly establish goals for life.
Tip #2: Follow a Budget
On its most fundamental level, financial well-being will stem from the ability to follow a budget. For some people, the word "budget" conjures up images of accounting software or other complex financial tools. But this doesn't have to be the case. Essentially, a budget is a comparison of what a person takes in (income) verses what he or she spends (expenses).
Set up a budget, or use a budget worksheet if necessary, to start looking at how money comes into and out of the household. This process will get people thinking about money in new ways such as...
--What is money being spent on each month?
--Is money being put away for savings or investments first before making purchases or paying bills?
--Are there expenses in the household that someone could live without, thus increasing the ability to pay off debt or save more?
Tip #3: Respect and Build Credit
Credit cards are powerful financial tools. They help establish a credit history. They give people payment flexibility and provide protection from needing to carry cash. They also come with rewards programs, allowing consumers to earn points, miles or cash-back for regular, everyday purchases.
But for some people, credit cards can be negatively powerful as they allow those who don't follow a budget (see Tip #2 above) to spend above their means and rack up massive amounts of debt. While "planned debt" (such as borrowing to remodel a home or making a large purchase such as a car) is something most people plan for and build into monthly budgets, "unnecessary debt" and the interest payments that go with it should be avoided at all cost.
Three quick tips for using credit cards would include:
1) Pay off credit card balances each month.
2) Make sure the credit card has a rewards program so that as the card gets paid off each month, the points, miles or cash-back bonuses can still be earned - which can later be used for special perks and premiums.
3) Make sure the credit card has an interest rate under 15%. If paying off a card balance each month isn't an option, ensure that low interest cards are those carried top of wallet.
Finally, it's not a bad idea for people to check their credit score and/or pay to have a credit report safety check in place to monitor illegal credit card activity or cards being taken out in the consumer's name without permission.
Tip #4: Education and Learning Matter
There are statistics upon statistics pointing to greater career success, higher income and other beneficial life benchmarks when people add education to their lives. This doesn't mean everyone has to get a four-year Ivy League college degree. Far from it.
Increasing one's education level could come from...
--Going to trade or vocational school after high school
--Learning how to invest and how to save
--Taking a community class
--Attending a local college
--Going back for a GED
--Applying for a four-year degree university
--Working towards a Masters degree or Ph. D.
--Enrolling in an online class or college
--Taking classes, seminars, or workshops through work
--Attending a conference
--Reading a book
Whatever one's education path may be, everyone should find areas in their lives to expand their learning opportunities, especially when it can improve one's financial literacy.
Tip #5: Save Money - Use Coupons
Why pay full price for anything when consumers have access to so many great coupons, discounts and offers out there? Yes, it takes a little time to find and "clip" those coupons, but the time is worth it when people can save hundreds (if not thousands) of dollars each year.
Tip #6: Protect Yourself - Get Insurance
Insurance for one's home, health, automobiles, business and other personal or professional assets is designed to do one thing...protect people in case of emergency.
It's true that nobody particularly enjoys paying insurance premiums; however, given the choice between making a few monthly payments (as a part of one's budget) in exchange for the protection and peace-of-mind insurance can bring a family, it goes without saying that insurance is indeed worth the time, energy and investment.
Consumers should find a trusted insurance agent or company that can help answer questions. Also, whether it's for one's home, car, life or health, people should make sure they understand what their insurance coverage will give them when the time comes to use it
Tip #7: Plan for the Future - Save & Invest
Everyone should sit down and ask themselves these questions...
--How much money is being saved each month?
--In case of job loss, is there enough in savings to live off of for six months?
--At what age will retirement come, and how much money will be needed?
Between high school and retirement, the average American has approximately 50 years to work, save and build up a "nest egg" to live comfortably on in the golden years. However, planning and committing to a savings and investment plan over 50 years is for most people, a daunting task, especially when asking teenagers to mentally buy into the process at such a young age.
It doesn't have to be overwhelming. The idea of preparing for a positive financial future can start small by opening up a savings account, setting up an auto-deposit into that account, and scheduling time to talk with one's bank or trusted financial advisor to discuss other investment options beyond the traditional saving account.
Tip #8: Own Your Home
Home ownership is a long term investment that over time (typically 15 - 30 years of paying off a mortgage) will leave people with an high-value asset. Several of the big questions people need to ask themselves when buying a home are...
--Is 20% saved to serve as a down payment on the home purchase? This may sound "old school" in a world where saving money is a foreign practice reserved for grandparents, but walking into a home purchase situation with cash for the down payment will lower one's monthly payment, eliminate mortgage insurance, etc.
--Is the Realtor willing find good properties that are within a planned budget? Too many people are "house poor", meaning they purchased a home with a price tag that was out of their budget once the monthly payments started.
--Is the Mortgage Broker lining up loan options that make sense and come from solid, healthy financial institutions?
--Is there a trusted home contractor to use if the home will need repairs?
Tip #9: Draft a Will
For many, discussions about death can seem uncomfortable or morbid. People avoid it. They don't want to talk about it. Or maybe it's simply a matter of procrastination. In any case, as one famous saying goes, "Death is certain...life is not."
Regardless of whether it's uncomfortable to discuss...death is a part of life.
Aside from the spiritual, emotional, and physical aspects of dying, as well as its effect on loved ones, a piece often overlooked is the financial outcome of death. Not everybody wants to talk about death and money when there are more important issues like enjoying time with loved ones and actually living.
The time invested in estate planning is well worth it, as those left behind will deal with how worldly assets are distributed once a loved one is gone.
Drafting a will doesn't need to be daunting task. People should get recommendations from friends and family for estate planning attorneys. If someone is contemplating drafting a will or revocable trust agreement themselves, note that in many states a handwritten (holographic) will often is ineffective and not recognized under some state laws. In fact, Do-it-Yourself will kits and software may provide a legally binding will, but often raise problems after death with unintended results from provisions not properly understood by the decedent. Remember that cheaper does not always mean less expensive. Very often, wills drafted without the assistance of a competent attorney lead to much larger attorney costs after death to fix ambiguities or other unanticipated problems, and some of the problems may not be fixable at all. The best bet is to consult with an experienced estate planning attorney, who can make sure documents are drafted--and executed--correctly and can help talk through questions do-it-yourself software wouldn't have thought to ask. Moreover, most reputable estate planning lawyers should be willing to provide an initial consultation at no cost (confirm that on the phone or in e-mail before meeting).
Consider these questions (among others) when having a will drafted:
--How much of the estate will go to the family? Which family members, and in what amounts? Should they receive the distributions all at once, or over time at certain ages, in trusts?
--Will there be gifts to individuals outside of the family?
--What are the gift tax consequences of gifts to people other than a spouse?
--How much money or assets will go favorite charitable organizations?
--Who should serve as the personal representative, executor, or trustee?
Other important documents to have include beneficiary designations for retirement accounts and life insurance (it is critical that these be coordinated properly with the will or revocable trust agreement, especially when they make up a significant part of overall assets), health care directives, and financial durable powers of attorney. Health care directives should contain statements about what kind of treatment is desired or not and in what circumstances (often called a "living will"), as well as appointment of a health care agent to make decisions when the person is not capable of making decisions (sometimes referred to as a "health care power of attorney"). A financial durable power of attorney appoints an attorney-in-fact to handle financial affairs in the event the person is incapacitated.
There is much to consider, and wise financial and legal advisors can help sort it all out. Having one's affairs in order will provide great peace of mind and the knowledge that property and assets will go to the intended beneficiaries after death.
Consider these statistics for having a will:
--Once all funeral-related costs are factored in, the typical traditional funeral service will cost the average family close to $8,000 - $10,000, says Mike Testa of Funeral-Tips.com (June 2012 statistic).
--According to a 2012 AARP survey, 2 out of 5 Americans over the age of 45 don't have a will. Some surveys put the percentage of adults without a will close to 60%.
--For funeral or cremation preferences, don't put them in the will, as that won't be probated until well after the time for the funeral. Funeral instructions can be left in a separate document, or incorporated into a health care directive / living will. Most importantly, let closest family or loved ones know the "death plan", i.e. "I want to be cremated."
--Social media is a part of daily life, so what happens to the online content created once someone dies? If people are active online, they should consider creating a statement of how they would like their online identity to be handled, like a "social media will." People should appoint someone they trust as an "online executor" (not to be confused with a legal executor). This person will be responsible for the closure of e-mail addresses, social media profiles, and blogs after death. (USA.gov)
TIP #10: Share Financial Wisdom
StageofLife.com welcomes people from every generation and stage of life to share their personal stories to help increase the collective wisdom on financial literacy. Maybe someone has been through a financial hardship and has insights to help others avoid the same situation. Or maybe someone has been extremely successful financially in some area of their life and would like to share tips to help others find similar success?
People are encouraged to take a moment to share their financial stories on StageofLife.com.
Additional financial literacy resources, links and free worksheets are available to accompany the above tips at http://www.stageoflife.com/FinancialLiteracy/Top10FinancialTipsforLife.aspx
NOTE: Stage of Life LLC does not provide legal or tax advice and its articles should not be relied upon as such. It is for educational and informational purposes only. Laws may vary by state. People should contact their own legal and tax advisors for advice on their particular financial circumstances.
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