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.
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.
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.
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.
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