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8 Things Couples Must Do Now for a Financially Secure Future

8 Things Couples Must Do Now for a Financially Secure Future

Whether you’re newlyweds, in a long-term relationship, or several years into a happy marriage, there are many steps you can take to ensure a financially secure future.

It’s wise to look at this from two points of view; first, what can be done to help the two of you remain secure throughout life, including your retirement? Secondly, determine what needs to happen right now for each of you to have financial security if one of you were to pass away at a young age.

Fortunately, this process doesn’t have to be nearly as difficult or time-consuming as most people fear. By making a few simple lifestyle changes and taking care of some critical paperwork, you can have a better future.

1. Make Wills

It’s always important to make a will in order to protect your partner. However, this is especially true if you aren’t married. After all, the state will be given the duty of dividing your estate if you die without a will, and this process always favors blood relatives.

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This doesn’t mean that married couples don’t need to worry about a will, though. Although your spouse is most likely to get the majority of your estate from the state if no will is present, the process of dividing everything could impose costly taxes on them that can often be avoided with a legal will.

2. Get Life Insurance

Both of you should have life insurance that names your partner as the beneficiary. There are many types of life insurance available, so be sure to take some time to research your options. For example, the Ladder online life insurance calculator helps you look at many aspects of your financial needs that may otherwise be forgotten.

By factoring in your remaining mortgage amount and other existing debts, you can get a clearer picture of how much coverage will be necessary for your partner to survive financially when you pass away. Doing this for each other is one of the best ways to show love because it ensures you’re each safeguarded and won’t need to sell your house in order to survive.

3. Determine Your Priorities

Most people could easily blow through millions of dollars if given the opportunity, but since this isn’t likely to happen, the two of you need to determine what your top priorities are. For some couples, this means living in a cheap apartment so that they can travel and build a retirement account. For others, a nice house is more important. By deciding what your top priorities are, you can adjust the rest of your life to continue saving money, while simultaneously improving your quality of life.

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4. Take Care of Your Health

A study by the American Heart Association indicated that exercising 30 minutes a day, five times a week, can reduce your annual healthcare expenses by $2,500. If you add in a healthier diet filled with vegetables and fruit, you’ll be in a good position to save even more money!

Commit to exercising and eating right to bulk up your retirement savings account, boost your life expectancy, and make it easier to enjoy your twilight years. After all, no one wants to spend the latter portion of their life feeling physically debilitated by medical issues that could have been avoided with a proactive approach.

5. Simplify Your Lifestyle

Take a look around your home. Is it filled with objects you don’t need and never use? Do you have a cable plan that includes hundreds of channels you’ve never watched? Is it common for you to buy new clothes before your current ones get anywhere near worn out? If you answered yes to any of these questions, you can save money by simplifying your lifestyle.

Reduce your cable plan or cut the cord entirely to save money. Start buying items only if they have a truly useful and practical purpose. Stop spending so much on clothing, especially if most of it hangs in your closet untouched for months at a time. Instead, put the money you would have spent on these things into your retirement account. You’ll thank yourself when you get older.

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6. Set Up an Auto Transfer

For many people, the process of taking money out of their paycheck and moving it into a savings account is where everything breaks down. People forget, or they end up spending the money on something frivolous.

Stop this breakdown in its tracks by setting up an automatic transfer. This will take the money out of your checking account and move it into your savings account for you. Experts recommend putting 10 to 15 percent of your net income into your retirement account. Overall, saving 20 percent is best because this allows you to also build a nest egg for emergencies.

7. Chip Away at Your Debt

Whether it’s a mortgage, credit cards, or old debt that’s hanging around your neck like an albatross, you must clear away this financial responsibility to boost your ability to save for retirement. It’s common for people to pay the minimum due on their debts, but this will drag your payments out for an extremely long period of time. Instead, even if you can only afford an extra $5 to $10 per month, be sure to always pay more than the minimum due.

It’s also wise to pick the debt with the highest interest and work on paying that one down as quickly as possible. Once you zero out a balance, start paying extra toward the next debt in line. According to Bank of America, paying just $10 more per month on a credit card balance of $1,500 with an APR of 18 percent will save you $1,202.41 in interest fees. The card will also be paid off in less than 4 years, instead of it taking an astounding 13 years.

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8. Make Wise Financial Decisions

One of the things that makes it heartbreakingly easy for people to lose everything is the tendency many of us have to overextend ourselves financially.

A great example can be found with people who agree to a mortgage that leaves them with no wiggle room for emergencies. In other words, if you and your spouse make a combined $7,000 a month, but your mortgage, bills, and other necessary expenses cost $7,000, you are setting yourself up for disaster.

Always make sure that you set up your expenses with a cushion of at least 20 percent. This makes it possible to build a savings account, and it also makes it less catastrophic if someone gets sick or loses their job.

It may seem daunting to make lifestyle changes and take on vital steps such as writing your wills, but this is the best way to have a happy, financially secure future. Don’t forget that exercising and eating healthy are also critical for future financial and physical health. As an added bonus, there are many proven ways to save money while eating healthier.

Begin implementing these changes right now to reduce your future risks.

Featured photo credit: Kan Wu via flic.kr

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Last Updated on June 6, 2019

The Average Retirement Savings and How to Save Wisely

The Average Retirement Savings and How to Save Wisely

Are you on track for retirement?

If not, don’t worry, I’m not sure either. I save each month and hope for the best.

Fortunately, I’m at an age where most people don’t save so I’m ahead of the curve.

But, what if you aren’t in your 20s? What if you’re near retirement and are looking to gauge where you stand?

If so, keep reading. Here’s how to prepare for retirement and save wisely during the process.

What Does the Average American Have Saved for Retirement?

Saving for retirement is tricky.

Tell someone straight out of college to save $10k a year for retirement and it’ll be next to impossible.

Make the same request to someone decades older and they’d be more likely to be able to save this amount. But, a 20-year old college student can be “financially ahead” of someone saving more than them. Why?

Age matters in your financial journey. The younger you are, the more time you have to save and put compound interest to work. As you get older and have more saving power, you’d have less time to put compound interest to work.

Here are the average savings Americans hold by age bracket:

20’s – $16,000

During this stage, most people are paying loans and moving up the corporate ladder. Your best bet during this stage is to focus on eliminating debt and increasing your income. Don’t focus only on getting a high-paying job neither.

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Instead, focus on learning via Podcasts, reading books, and taking specialized courses. Doing this will make you more valuable and give you more career options.

30’s – $45,000

At this stage, you’ve hopefully escaped your entry-level salary and work at a career you enjoy. Your earning power has increased but you now have more obligations. For example, marriage, kids, and a mortgage.

Set a plan to pay off all your debt and focus on eliminating unnecessary expenses. Leverage financial tools like Personal Capital to ensure you’re on track for retirement.

40’s – $63,000

This is the stage where you’re at the prime of your career. Top financial institutions recommend you have at least 2 to 4 times your salary saved up. If you’re falling behind, start maxing out your 401K and Roth IRA accounts.

50’s – $115,000

During your fifties, you’re close to retirement but still, have time to save. You may be helping your kids pay college tuition and other expenses. Since you’re at the peak of your earning power, max out all your retirement accounts.

60’s – $172,000

By this point, you should have about eight times your salary saved up. If not, you’ll depend primarily on social security benefits averaging $1400 per month. Max out all your retirement options as much as possible before retiring.

Ways to Save Money on a Tight Budget

The sad reality is that most Americans aren’t saving enough for retirement.

Even high-earning power isn’t enough to secure one’s financial future. You need to have the discipline to save for retirement while time is in your favor. Don’t wait for you to have a high salary to save, start with having a small budget.

First, get a clear picture of where you stand. Write down a list of “needs” and “wants.” For example, Netflix and Amazon Prime are “wants” and a “cell-phone” is a need.

Use tools like Personal Capital to analyze your spending patterns. Personal Capital allows you to add all your financial data in one place–making it a powerful option to gauge where you stand.

Once you know all your expenses, organize them from highest to lowest expense. When you can’t cut more expenses, call your service providers to negotiate a lower price. If you’re not good at negotiating, use services like Trimm to lower your monthly expenses.

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How to Save Money Each Month

By this point, you know the average amount of money you should have saved for retirement based on your age.

But, breaking this down into monthly goals can be challenging. Here are some rule of thumbs to follow:

Aim to contribute 10%–15% of your salary each paycheck. Review your progress each week.

Why so often? The reality is that life gets in our way and you will have many financial setbacks. Your goal isn’t to be perfect but to get back on track instead.

Reviewing your finances weekly lets you know where you stand with your retirement. This doesn’t have to be a long process either. All it takes is login in Personal Capital to view your net worth and check how much you have saved for retirement.

Turn saving into a game and aim to save more each month. It will get challenging but you’ll get creative and find more ways to save.

Top Money Saving Challenge Tips

To prepare for your financial future and not be another statistic you need to be different.

How?

By adopting new habits that’ll help you become a saving machine. Here are some ways you can save more:

Automatically Contribute Towards Retirement

If you’re working for a company, you can automatically contribute towards your 401k. If you’re not currently contributing more than 10%, make this your goal. Contribute 1% more today and automatically increase this amount a year from now.

Odds are that you’re not going to be negatively affected by contributing 1% more. Many times we spend our money on things we don’t need. Contributing more towards retirement is a great way to secure your financial future.

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Use the Right Tools to Know Where You Stand

Once you’re contributing more towards your retirement accounts, gauge your progress. Make use of finance tracking apps to help you view the big picture of your retirement.

When I’d first signed up for the app Personal Capital, I didn’t know I had a negative net worth. Despite saving thousands of dollars, my debt brought my net worth to the negative. Knowing this motivated me to save more and spend less.

Now, I have a positive net worth. But, it was because I was able to view the big picture using the app. Find out what your net worth is using a finance tracking app and you may surprise yourself.

Bring in Experts to View Your Blind Spots

If you have too little or too much money saved, you should consider hiring financial experts.

Why?

You may need someone to hold you accountable to help you reach your financial goals. Or, you may need help managing your money as effective as possible.

Regardless of the reason, getting help may help improve your financial situation.

Before you hire an expert, find out which areas you need help the most. For example, if you’re constantly overspending, find a debt counselor. If you’re struggling with choosing the best investment options, hire a financial advisor.

Speed up Your Retirement Contribution

After learning how to manage your money well, the next best thing is to earn a higher income.

You’re capped at how much you can save but not much you can earn. Even if your employer isn’t giving you a promotion, you can still take charge of your financial future. How?

By starting a side-business.

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This will be something you’d work on after you’ve finished your day job. Once you start earning income from your side-business, you’ll be financially better off.

The best part is the more work you put into your side-business,[1] the more potential it has to earn more money.

So start a side-business in an area you’re familiar with. For example, if you enjoy writing, do freelance writing for small e-commerce businesses.

Once you’re earning a higher income, you can contribute more towards your retirement. Don’t wait for the right opportunity to secure your financial future, create one.

Reach Financial Freedom with Confidence

What if you were able to retire tomorrow with no problem, all because you’d have enough money saved up and little to no debt left to pay off? How would you feel?

My guess is that you’d feel happy and relieved.

Most Americans are falling behind their retirement goals for many reasons. They’re not prepared, they carry bad money-habits and are thinking short-term.

For you to retire successfully, you need to work backward and adopt better habits. Contribute more towards your 401K and focus on growing your income.

If you do, you’ll save money and pay debt faster.

Don’t beat yourself up if you’re behind your retirement goals. Take the first step today towards a brighter financial future. Isn’t retirement worth the hard work and sacrifice to be at peace?

Featured photo credit: Huy Phan via unsplash.com

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