It’s been said that money isn’t everything, but I wouldn’t disagree with the person who said it.
While it can be difficult not to get wrapped up in materialism or focus too much on financial goals, it’s important to have financial objectives if you don’t want to struggle when you retire, or find yourself in other precarious financial situations like bankruptcy and foreclosure.
Here are the top 10 financial objectives everyone should have—no matter what age they are!
1. Make A Will
It’s sad, but more than half of Americans die without a will. This means their assets could be tied up in probate (the legal process for dealing with a deceased person’s estate) for years and would likely end up costing beneficiaries more than if there had been a proper plan.
Setting up a will doesn’t have to be expensive and it allows you to appoint someone as guardian for your children or appoint someone else to make decisions about final arrangements on your behalf.
A will also clarifies who gets what, which can save time and hassle after you pass away. A good attorney can draft one relatively quickly—and much less expensively than probate court.
2. Update Your Estate Planning Documents
Reviewing and updating your estate planning documents can help reduce estate taxes, provide for a smooth transition of assets after you pass away, or ensure your wishes are carried out as planned.
Your estate planning documents also don’t just affect you – they also can have an impact on your family. Every adult should have an up-to-date will to designate who inherits their property and other assets when they die.
It is also important to update your beneficiary designations so that assets pass to named beneficiaries rather than through probate court when you die.
This includes accounts such as retirement plans, life insurance policies, annuities, pension plans and even vacation timeshares. It also includes bank accounts where you designate someone as a joint owner.
3. Start an Emergency Fund
Emergencies are a fact of life, but that doesn’t mean you have to let them derail your financial goals. Whether it’s a job loss, unexpected medical bills or some other roadblock, an emergency fund will help you quickly get back on track.
The general rule is to have at least three months of expenses saved up in case of a crisis. In addition to helping you weather emergencies with ease, a well-stocked emergency fund also lowers your overall level of debt and improves your credit score by reducing debt-to-income ratios.
4. Get Good Health Insurance
Health insurance is a must. It’s extremely difficult to build wealth while spending money on medical expenses—especially if you don’t have a plan in place to cover them.
If your company offers coverage, enroll in it immediately and sign up for a high-deductible plan with low premiums.
In addition, you may want to purchase dental and vision insurance if your plan doesn’t offer it. If you decide that you don’t want coverage through work, consider purchasing a health-insurance policy directly from an insurer, such as Anthem Blue Cross or Blue Shield of California.
Health care plans purchased on an individual basis are cheaper than employer-sponsored plans.
5. Create a Safety Net for Yourself and Your Family
If something were to happen to you, your family could fall apart. For example, if you got laid off and couldn’t find a new job quickly, you might be unable to pay your bills.
Developing an emergency fund of at least six months of living expenses will help you weather sudden financial storms.
And make sure that safety net is diversified: include both cash and investments like stocks or bonds—you never know which will come in handy first.
6. Build Wealth Through Investing
Many people know they should be investing, but few actually do it. If you’re not planning on retiring in your 20s or 30s, you need to be regularly contributing to an investment account—preferably one that is low-cost and tax efficient.
Even if you don’t have a big income, there are plenty of ways to save for retirement without sacrificing your lifestyle now: Contribute to an employer-sponsored plan like a 401(k), fund an Individual Retirement Account (IRA) or roll over a previous 401(k) or 403(b).
Even small amounts can grow over time. Keep adding money even if it’s only $100 per month; over time that $100 will grow into thousands.
7. Pay Down Debt
There are few things more stressful than owing thousands to creditors. So start out by paying off what you owe as quickly as possible.
Once you’ve started chipping away at your debt, try to maintain that payment schedule and move on to your next financial objective.
That way, if you ever do slip back into debt again, it won’t take nearly as long or cost nearly as much money to fix it.
8. Understand How Insurance Works
There are some types of insurance that everyone should have. These include life insurance and disability insurance. Disability insurance is meant to replace a percentage of your income in case you cannot work because of illness or injury.
If your employer offers a plan, it’s important to participate in it, but you may want to consider purchasing additional coverage as well.
Another important type of coverage is life insurance. Insurance can help provide for your loved ones if something were to happen to you unexpectedly, such as death or critical illness that prevented you from earning an income.
The best way to find an affordable plan that fits your needs is by doing research online and asking family members for recommendations; most major companies offer life insurance quotes online so that people can estimate how much their coverage would cost them.
9. Understand Taxes And Why You Might Need A Tax Advisor
Taxes can be scary, but with a bit of education you’ll know what to expect and how to prepare. Taxes can seem like a burden, but they’re absolutely necessary for our society to function.
If you're struggling to pay your taxes in full every year, it might be time to seek some professional advice from an experienced tax advisor who can help you get on track. Just make sure you read through our short summary first!
10. Get Involved In Your Community
Volunteering for a charity or non-profit organization is an excellent way to meet new people and experience new things.
By getting involved in your community, you will be supporting worthwhile causes while meeting like-minded individuals who are also looking to better their community.
When networking, remember that it is important to focus on building connections with people who can help you reach your financial goals.
The more positive energy you put out into your community, the more your community will want to help you succeed.
If financial independence is a goal of yours, don’t hesitate to get yourself involved in organizations that can help you achieve your dreams!