#YOLO: So Don’t Ignore Your Need for Life Insurance.

#YOLO: So Don’t Ignore Your Need for Life Insurance.

Insurance, Marriage, Parents, Planning

#YOLO (You Only Live Once) has become a hashtag phenomenon in twitterverse that is often accompanied with some ridiculous behavior. I decided it could use a #responsibleYOLO spin, followed by some solid advice.

Life Insurance is an often ignored and under prioritized need in one’s financial situation. However, it couldn’t be more important to protect your family and I’ve seen the results that not having appropriate insurance can have – even in your 20s and 30s. Ultimately, obtaining the appropriate amount of life insurance is not about you. It’s about your family and making sure they’re protected in case something happened to you. As a GenYer, if you are married and/or have children that are dependent on your income, how would your salary be replaced in the event of your death? Would your spouse be able to maintain the household expenses? What about the mortgage payment? Whether you are the main breadwinner, contributing a portion of the household income or staying at home with the kids, there are contributions you are making, whether financially or in the form of a “value” provided through the activities that you perform, which should be protected. Below are some items to consider when evaluating the amount of life insurance you need:

Income Replacement & Timeframe

How much income would your family need if something were to suddenly happen to you and for what time period? For example, if you’re 30, married, and have a child at home, you may need your life insurance to cover costs until your child is 18 and then until your spouse retired at age 65. This includes amounts they would need to maintain lifestyle and household expenses. Be sure to account for other income sources available such as your spouse’s wages, interest and dividend payments, etc.

Debt Load

Consider the outstanding balances on any mortgages, car loans, student loans and any other types of debt. Total these values and incorporate the number into your life insurance face value. Being able to pay off these balances would decrease the income replacement percentage that your spouse or family would need if they lost your income.

College Expenses

If you’re planning to pay for all or a portion of your children’s college expenses, it’s best to look up the average cost of college in today’s dollars. According to Savingforcollege.com, the cost of a 4-year degree at a public university for those with in-state residency is $37,800 (not including room/board, books and other fees). Start by incorporating today’s costs into your policy and reevaluate over time. If something were to happen to you today, the proceeds could be invested and allocated in such a way to grow and keep up with future expenses.

Final Expenses

Depending on the type of service you want, final expenses can range from a few thousand to $15,000+. The FTC offers this guide for pricing out and comparing the costs between different providers and options. A general rule of thumb is to include $10,000 – $15,000 in the face value of your policy to cover final expenses.

Current Asset Level

Be sure to consider any amounts that you already have stocked away such as savings accounts and money markets, 401(k)s, IRAs, Roth IRAs, stocks, mutual funds, etc. These are assets that will also grow overtime and help to supplement income needs.

The Value of What You Do

Even though one spouse may stay at home, there is still value provided through activities such as childcare, housekeeping, yard work, and more that would have to be replaced by either the surviving spouse taking over or paying for daycare, gardening or housekeeping services. Be sure to incorporate these expenses into your life insurance needs estimate. Keep in mind that the amount of life insurance you and/or your spouse need will change over time as your situation changes. With family additions, home purchases and upgrades, income level fluctuations and more, the amount of your insurance coverage should be evaluated on an annual basis at a minimum or immediately after a change to your financial situation. Like what you read? Sign up for the Workable Wealth community for more tips and resources and receive 9 Steps to Workable Wealth, a free guide to help you kick start your financial journey.

6 Steps for Wedding Season Savings

6 Steps for Wedding Season Savings

Planning, Saving

Wedding season has been in full swing this year with the media abuzz, invitations to showers, ceremonies and receptions flowing, and a level of stress impending due to the amount of money that is being spent on these joyous occasions.

Wedding season spending is enough to stress anyone out. However, your spending doesn’t need to be out of control if you follow these 6 steps to organize and prioritize:

1)    Make a list. List out each wedding you’ve been invited to and all of the events (showers, bachelorettes, bachelor parties, etc.) associated with it and potential costs for each. Be sure to include travel, hotel accommodations, dress or tux rentals or purchases, gifts, hair and makeup (if needed) and any other expenses you may incur along the way.

2)    Prioritize. Once you have a dollar amount attached to each event and wedding, ask yourself which events mean the most to you to be a part of. The big day likely trumps all, but you may find yourself choosing a more intimate bridal shower or group gathering to celebrate with your friend on a smaller scale. Pick the one you feel most comfortable attending while being aware of your budget.

3)    Start Saving. With decisions made on which events mean the most to you, you should have a final cost estimate for each wedding. The best way to not break the bank with each event is to start saving today. Take a look at the time frame you have until each wedding and set yourself up on a systematic savings plan to get you to where you need to be (or at least close). Whether it’s $50 every two weeks, or $150 – by putting the money away now, you’ll have it on hand as each wedding occurs and won’t feel the strain nearly as much as if you were dishing out all of the cash at one time.

4)    Plan ahead. For travel, book early and utilize a website such as kayak.com or airfarewatchdog.com for price alerts on flights.  Also keep in mind that Tuesdays are typically the cheapest days for airfare shopping.

5)    Get creative for gifts. This advice is tried and true. If you’re artistic, crafty or have a special skill that can be shared such as photography, cooking, or even car maintenance, offer up your services or create something unique for your friend. This will not only minimize the amount of cash flow strain, but will likely mean much more.

6)    Be honest. Not only with yourself, but with your friends who are getting married. If something just isn’t in your budget, let your friends know. If you’re missing in attendance, they’ll know it’s not because you don’t want to be there. Offer to spend some one on one time with them instead, or help to stuff and send out invitations. Weddings are an opportunity to share in the excitement of the big day together and not about the amount of money that comes out of your wallet.