Are you preserving enough wealth for your future?
It’s berry season and those fragrant fruits always make me think of my grandmother who would be busy canning this time of year. She got it that if you wanted to crack open Mason jars of canned peaches or enjoy homemade jam in Iowa in the dead of winter, you had to preserve them in the sweet summer months while those beauties were plentiful and affordable.
If my grandmother was sweet on you, she’d give you some of her canned peaches. She didn’t have a lot of money, but she knew how to create a simple, tender life that she savored for many years.
Preserve your wealth.
The wealth my grandmother preserved ended up funding many advancements for generations of our family, even though she was not educated past grade school. She got money, knew how to earn it and save it, and knew how to nurture people with her wealth of energy.
You can do this, too, with the assets you’re creating in your life.
You just need a good plan and don’t get down when your life really is the pits. That happened to my grandmother (and her entire generation of depression-era and war-time kids), but they didn’t stop living and doing their best each day. They made hay while the sun shined and worked through times together that were really bad economically for everyone.
Enjoy a sweet life.
You probably want to create a sweet life now and enjoy a good retirement, too.
If you’re pushing 50, you need to save some of your wealth while you are at the peak season of your earnings. So, let’s talk about how to put away more of your money now for your winter years, when you’ll be retired and wanting to rest in the ease of a well-lived life.
So that you’re not worrying about money when you’re 80, we’ll look at your 401(k), your emergency savings plan, and getting the best term life insurance for you.
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If you’re not yet 30-something, know that this is actually the key time to start growing and preserving your wealth. Instead of playing catch up like most 50-year-olds, you can use the magic of compound interest and time to pave your own yellow brick road.
Paradise is a feeling, not a place.
I have no idea where your path to bliss might lead you, but for most people it takes some money to get there. But, know that paradise is a feeling, not a place.
One of my coworkers has this quote in her cube. It’s a good reminder that we all have bliss (paradise) naturally inside of us. Our basic goodness can’t be snuffed out even in the worst storms of life. So, that’s a good thing to remember at any time. Paradise now, baby!
But, at the same time, it sure helps to be able to fund the expression of your joy and happiness. It’s nice to be able to help others out, too.
So, learning to store wealth as seeds for future happiness (meaning you don’t burn through all of your energy or earned money too quickly) is part of gracefully pacing a life. And, if you end up with too much stored wealth (party!), you can always share it with others.
Practicing generosity might feel like the bliss of the best beach in Hawaii to you. So, let’s do some planning around wealth-building to help you develop a stash of cash you can share at any time with those you love.
Can term life insurance replace my emergency savings, a 401(k) retirement plan, or the joy of laughter?
The simple answer is no. Life is BYOF (bring your own fun) and not even the best term life insurance plan can replace that. But, to create a solid financial plan to protect you and your family from money troubles, you need:
- a job that pays a living wage;
- a budget of what your “have-to” vs. “want-to” expenses are;
- an emergency savings plan;
- a retirement plan, such as a 401(k); and
- the best term life insurance for your family or business.
Most of us need a budget to build wealth.
Do you know how much your current life costs? If you don’t, you won’t have the tools to analyze how to make your money life work for you.
Every time you pay a recurring bill this month, note it in one place. Write it down. Put the paper bill in a pile on your desk. Or, sign up to track your spending online at Mint, for example. Keep track of your “have to” spending. Then subtract these bills from your salary. That is what you can spend on your “want to” things in life.
Stop blaming your spouse for overspending or waiting for them to start managing their finances. Get separate accounts for “want-to” budget items and one account for the “have-to” bills. If you can’t agree on finances, get some counseling. One of the biggest causes of divorce is ongoing financial stress. So, if you don’t deal with it, you may not have a marriage to save later anyway.
Everyone has “have-tos” in life. For example, to make my life work, I need my car to drive, my iPhone to function, to live somewhere safe, and to be healthy. So what does that look like from a budget perspective? Here is the “have-to” list for my own personal budget:
Budget for monthly “have-to” costs:
- home (including mortgage payment, insurance, taxes, and utilities)
- car (including gas money, insurance, and maintenance)
- health (insurance and savings account for costs not paid by health insurance)
- iPhone (mobile service and loan payment)
- savings (taxes, life insurance, emergency fund, and retirement fund)
There is not much on this list because these are the basics that I have to earn enough to pay for with my salary by myself.
Everything else is nice to have or do, but not necessary… including most types of food. You really can live off of not much, if you have to. Most of us did it in college. Rice, corn, and beans combined in one meal are a complete protein and not expensive.
Most of the world survives on much less than we think we have to have in the USA. So, you can do it.
You can simplify your life. The trick is finding what gives you joy and peace of mind. If you have that, you’re golden, even if you don’t earn six figures. Most of us don’t earn six figures, but we have the expectations of people who do. That’s where we get into trouble with money and our emotions.
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Budget for monthly “want-to” costs:
- food (cooking at home vs. dining out vs. entertaining)
- clothes (including work and play clothes)
- personal care (hair care, etc.)
- vacation and hobbies
- home furnishings and garden
- gifts (including charity)
For some of us, we may go through periods in life where we don’t get to pick a lot off of this list. Especially if you have kids, you’re balancing your needs with your kids’ needs. It is not easy to say “no” to our own inner child or to our kids asking us for more stuff at Target. I get that. But, if you can stick to a budget, you’ll won’t be haunted by credit card debt and you’ll be teaching your kids that having more stuff does not make for a happier life.
What you did in Las Vegas followed you home on your credit card.
Why are you avoiding creating a budget? Well, it will alter the way you see your life. And, some of us don’t want to give up the things we can’t afford.
But a budget may make that “stay-cation” at home better than blowing your wad on a vacation in Las Vegas that you actually can’t afford. What you did in Vegas may have stayed there, but your credit card statement will have followed you home and may be haunting you.
Tackle creating a monthly budget with a friend.
Tackle creating a monthly budget with a friend who wants to get their financial life in shape. People who have workout buddies tend to, well, workout. My coworker Snapchats us when she’s on the treadmill to help her stay accountable to her workout plan. We cheer her on as she sweats her way to better health.
By tackling your budget, you’ll know what your current lifestyle costs. Then you can determine how much you need to shave off of your “want to” costs to take care of monthly:
- automatic payments of your “have to” costs,
- automatic bank transfer into your emergency savings fund,
- automatic payroll contribution into your 401(k) or bank transfer into a Roth IRA, and
- automatic payment of your term life insurance policy.
If this doesn’t sound exciting to you, I get that. But, leading a responsible life is not always exciting. It has a certain level of predictability that makes it doable over the long run. That’s why you should automate every payment on this list as soon as possible. You set it up once and forget it.
If you worry that you won’t have money left to pay for your “want to” stuff, you need to confront that fear. That’s your credit card debt right there. So, set up two bank accounts:
- Paycheck goes into “have to” account.
- Autopay pays your “have to” expenses.
- Remainder gets transferred into your “want to” account and you monitor your spending.
When you run out of money in your ‘”want to” account, you know you’re using your credit card. What day of the month does that happen? Try to refine your budget until you know how to pace your “want to” spending. You’re going to need to train yourself to create new saving and spending habits. But, this system creates the awareness you will need to retrain your habit mind.
See what you’d pay for life insurance
It’s okay to have a secret stash of cash.
Some of you may need to hide from your family that you are stashing cash. My grandmother kept her own spending money discretely stashed in her lingerie. No one had access to it except for her.
If you have an irresponsible sibling, parent, or cousin, you can’t let them rob your savings bank, especially if they are dealing with addiction issues. Tough love is tough.
I am sorry for anyone who has this going on in their life. It’s a hard thing to deal with. Just because you love someone doesn’t require you to fund the part of their life that may destroy them.
Find a way to discretely tuck away what you need. Don’t talk about it or advertise it. Just do it.
The financial basics of stashing cash.
So, let’s go over some financial basics related to stashing cash for your emergency savings funds, your retirement savings, and the best term life insurance for you. Ideally you would fund all three of these at once, but that may not be possible.
What should you do?
Create the habit of saving with your next paycheck in three steps:
- Get a quote for a 10-year term life insurance policy.
- Set up an automatic payroll deduction for your 401(k) in the plan’s most minimum amount.
- Set up an automatic payroll deposit into your checking account. Transfer a small amount automatically on your payday into your emergency savings account.
You have just set up the automatic system for getting the best term life insurance policy in place, plus saving for a rainy day and your retirement. Setting up the system takes time, but it will pay off as increasing your auto-savings is easy.
So, while you are saving money by stashing cash, you need to insure your life with an affordable plan in case you would unexpectedly die. Your loved ones probably need your earned income. So, you are buying the best term life insurance that you can afford to replace your potential lost income. That’s it. That’s the reason to buy the policy.
What is term life insurance?
A term life insurance plan covers your most important needs for the length of time you need that coverage.
Term life insurance is very affordable for most families because it is meant to replace necessary income only for the period that you need it to last (the term of the policy).
Term means a length of time. If you went to high school or college, you probably had a paper that was due at the end of the term (the semester). We’re using term to mean the same thing here for a life insurance policy. The best term life insurance lasts for only the time period you need it to last.
With term life insurance, you don’t have to worry about paying too much for life insurance or being overinsured.
So, for example, let’s say you have no emergency savings, but you’re expecting your first child. The lights are going on that you need a back-up plan to take care of your child if you (or your child’s other parent) would die.
But, you don’t have enough time to completely overhaul your financial life before your baby arrives. Get a 10-year term life insurance plan that you can afford now.
Then, buy another policy later in life as your financial needs evolve and you have more money to invest in protecting your family.
A $500,000 term life insurance policy is more affordable than you think.
You may realize that you can afford to just get a $500,000 term life insurance policy now that will cover your family for 20 or more years. Look at the term life insurance rate chart below. Surprised? Most people are. They overestimate the cost of the best term life insurance, so they don’t bother to investigate their policy options.
The younger you are, the more likely you are to be healthy. Just like you lock in your mortgage rate and it stays that way for 30 years, you can lock in your rate now as you build up your stash of cash savings for your future.
|Estimated Monthly Cost of a 25-Year $500,000 Term Life Insurance Policy|
|Healthy 30-Year-Old Male = $29||Healthy 30-Year-Old Female = $25|
|Healthy 35-Year-Old Male = $34||Healthy 35-Year-Old Female = $29|
|Healthy 40-Year-Old Male = $48||Healthy 40-Year-Old Female = $40|
|Healthy 45-Year-Old Male = $76||Healthy 45-Year-Old Female = $58|
Does term life insurance replace my 401(k) or retirement planning?
No. The best term life insurance is to replace your earned income while you are building up your emergency savings and your retirement funds.
Why should I invest in both my 401(k) and a term life insurance policy?
They serve different functions in your money life. Your 401(k) funds your retirement years. Your term life insurance policy is there to protect your family during your income earning years. Your family won’t get the life insurance payout unless you die. So, it’s not meant to replace having an emergency fund or retirement fund that you need while you are alive.
How do I get term life insurance quotes?
We created our quoting tool to deliver you the quotes in minutes. Our free, anonymous, comparison quoting tool offers you custom rates from the nations top life insurance companies in minutes.
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Get term life insurance quotes today with our free online comparison shopping tool and remember to automate your savings life (emergency savings and retirement savings) with your next paycheck. Just do it. Start with the minimum you can afford. Then, every month for one year, increase the amounts gradually. In 10 years, you will thank yourself for doing this. If you have 20 to 30 years to build up, you’ll be set and glad you started when you did. This really works. Just tackle it now and start preserving your wealth today.
Note: Life insurance quotes used in this article accurate as of July 30, 2018. These are only estimates and your life insurance costs may be higher or lower.
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