Many people wonder what the blueprint is for a financially successful life. The answer is that there isn’t one. Life has a habit of being unpredictable. At any moment, some event could occur that dramatically changes the course of your financial future. One minute you’re riding high, enjoying a substantial income and regular holidays. The next minute, you get made redundant, and your car breaks down.
It’s not possible to predict everything that could affect your finances. But some strategies can make money troubles less likely. Here’s what to do.
Visit Your Lawyer And Make A Will
Many of us already have wills: it’s often one of the first things we sort out when we take a new job. But that can also be a problem. For instance, you may have recently been divorced. Your old will might still have your former partner’s name in the document. So it’s important to update this as quickly as you can to prevent them from receiving all your money. It’s also important to start putting your assets in a trust if you have children. Education and maintenance trusts keep your money safe and help to reduce your overall tax bill.
Pay Off Your Credit Card Bills
Around 40 percent of people carry some form of credit card debt. That’s a significant chunk of the population carrying around a financial burden anathema to their future. Many people play what’s called the “0% balance transfer game.” They transfer credit from high-interest credit cards to low-interest credit cards. It is not a good idea in the long run because it can destroy your credit score. This, in turn, can ruin your ability to get good insurance deal and loans in the future. Instead, create a plan to get out of credit card debt quickly.
Take Out Life Insurance
Most experts agree that life insurance is a necessity that few can afford to go without and it’s especially important for those over 50. A good rule of thumb is to get life insurance cover that’s between six and eight times your annual income. This helps any dependents or spouses continue to pay your debts when you’re gone.
The level of life insurance cover you choose will be different depending on your circumstances. Those with more children will want to take our more generous packages to help make sure their kids are properly looked after. Others might not need a comprehensive policy, like a whole life policy. But they may want to get something that covers one-off expenses when they’re gone.
Don’t Count On Social Security
Many working-age people just assume that their social security is safe. But the truth is that the money was all spent by the government a long time ago. Now payments are made out of government borrowing and current taxes. Pew Research shows that social security payments exceed receipts. Projections show that by 2033, social security will only pay around 77 percent of promised benefits. That means that people over 50 are looking at a reduction in their income of nearly a quarter. Thus, the sensible thing to do is to start putting more money into your individual retirement account.