Many of us are natural-born procrastinators, especially with financial matters. For instance, it's not unusual to delay until the last minute to file a tax return, but Motley Fool gives us a few money moves Americans tend to delay—and reasons why you shouldn't wait any longer in the article “3 Money Moves You Can't Afford to Put Off.”
An emergency fund. We're supposed to have at least three months' worth of living expenses in savings for emergencies, but 40% of Americans don't have the money to cover even a $400 unplanned expense. That means they're not even close to where they should be with their savings target. Without an emergency fund, you risk incurring costly debt if your paycheck disappears or you experience a surprise bill your regular earnings can't cover.
Financial emergencies can happen to any of us at any time. The longer you go without savings, the more you put yourself at risk. Instead, decrease the expenses in your budget to give you additional cash and deposit it in the bank. You could also get a temporary side job to bolster your cash reserves, especially if you're starting with absolutely zero.
Life insurance. If you have a family that depends on you financially or that might suffer financially in the event of your death, you need life insurance, even if you're not a high earner and you don't have children. Without a life insurance policy, you risk leaving your spouse and/or family in a financial crunch.
Choosing term life insurance over permanent life insurance can help keep those premiums affordable. You should remember that you don't need to buy the most generous available policy. A policy that pays your heirs a $1 million death benefit will cost more than one that pays out $200,000, so consider your basic needs and try to have them covered. Our firm doesn't advise on life insurance but we can refer you to an expert to discuss your options.
A will/trust. About 58% of Americans don’t have a will. Without this critical legal document, you'll have no say on how your assets are divided after you pass away. If you have minor children, you won't be able to name a guardian to care for them when you're not around. These are good reason to have an estate planning attorney draft a will, even if you're not wealthy and don't have much to leave behind. In California, if you want to avoid probate and you have assets that exceed $150,000, we recommend you have a trust. Also, having an advanced health care directive naming someone to make medical decisions for you if you become incapacitated is a must.
So, if you're a procrastinator by nature, don’t put off addressing these items. You never know when a financial emergency or tragedy might happen.
One of the main goals of our law practice is to help families like yours plan for the safe, successful transfer of wealth to the next generation. Call our office today to schedule a time for us to sit down and talk about your estate plan, where we can identify the best strategies for you and your family to ensure your legacy of love and financial security. Our office is located in Santa Ana, CA but we serve all of California including Irvine, Orange, Tustin, Newport Beach, and Anaheim.
Reference: Motley Fool (February 23, 2019) “3 Money Moves You Can't Afford to Put Off”