60 Days to Change: Week 5

(Green Candy.com) - Below is a summary of the second week from the 60 Days to Change Challenge program. For more specific details on each day of the challenge sign-up here . 

 

Day 29
Protecting Yourself

We are 29 Days into our 60 Day Journey, and hopefully you can start to see the light at the end of the tunnel. We have tried to help you build a diverse set of financial skills. You probably have figured out at this point that money has less to do with money than you originally thought. Money, it turns out, is all about discipline and habits. Therefore, your efforts over the previous 28 days will certainly pay off in the end. But sometimes life happens before you are ready for it to happen.

Your financial plans should be accomplished no matter what happens to you. Proper emergency planning puts you in the right position. Contingency planning is vital. You may lose your job, you may wreck your car, you may become sick, but your financial life has to account for these risks.

Ignoring risk is a common mistake amongst Americans today. Accepting risk is not perpetuating pessimism, but instead it is being smart. Don’t confuse regular risk with market risk. Many people do a good job managing market risk. Market risk is the risk associated with the stock market. There are many other types of risk, and you simply need to learn how to manage them.

You must take the time to protect yourself. This week you will learn all about emergency funds, insurance, and wills. You should take the time to see how each of these areas affect your life.

 

Day 30
What is an Emergency?

Many people may have the funds to handle any sort of financial emergency, but before the actual emergency happens the money missing. Where did it go? It was spent on a non-emergency. Defining “what is a financial emergency” is a vital part of this week on 60 Days to Change.

The most common non-emergency that takes emergency funds is: a sale. People tend to blow through emergency monies when faced with tough consumer choices. Although there may be some good deals out there, emergency funds should only be spent on true emergencies.

Here are the most common emergencies that should be handled with emergency funds

• Job loss
• Medical bills
• Vet bills
• Car repairs

 

Day 3
Emergency Plan

Every family needs an emergency plan. There is no better time than the present to take yourself through the following 3 questions:

1. What will you do if you lose your job?
2. What will you and your family do if you become disabled and can’t work?
3. What will your family do if you die?

These are very tough uncomfortable questions, but you still need to address them. You need to put together a set of plans that allow your family to succeed, no matter the circumstance.

 

Day 32
Call Your Insurance Agent

Trust is an important issue when it comes to you, your family, and your finances. Yet many times people don’t allow trusted relationships to positively affect their lives. And insurance is one category where people (especially younger people) tend to ignore these important relationships.

Insurance is a very tricky thing. You want to have great insurance, but you never want to use it. And the second that you utilize the insurance, it gets harder to obtain. Most people think that they understand insurance, but the fact is that they don’t. You need to talk to an expert about your insurance coverages. In many instances, you are required to buy insurance. Why not buy it from a person or company that can actually explain it to you? It may cost a few dollars more, but you won’t get stuck buying insurance coverages that don’t protect your assets.

Day 33
Life Insurance

I don’t know quite how to cushion this blow, so I am just going to come out and say it: you are going to die. Sorry. It’s true. Nothing will destroy your family’s financial future quicker than your premature death. However, you can minimize the damage to their finances by taking the proper steps to insure your life. Yes, life insurance.

Generally speaking, there is no less comfortable topic than life insurance. By participating in the conversation, you are admitting and visualizing your mortality. But it is important to take yourself down this path.

Most people with young families should insure themselves with 7-10 times their income in life insurance. Life insurance should help replacement your income in the event of your death. Remember, life insurance is much less expensive when the insured is young and healthy. Don’t wait too long to buy the coverage you need.

Day 34
Will or Trust

The importance of having “final documents” goes way beyond conventional wisdom. For years, many people have felt that only the wealthy need a will or trust. But, in fact, everyone needs final documents of some sort. The more complicated your life, the more complex documents you will need. There are a number of different things that need to be addressed in your legal documents.

1. Who will take care of your children?
2. Who will take care of your money for your children?
3. Who can make medical decisions for you?
4. Who will get your property?

Don’t just assume that your family will figure it out. Your job is to figure it out for them. It will prevent heartache for them, and it will save your hard earned money from going bye-bye. Probate costs are expensive, and you want your money to go to your family. If you don’t make final arrangements, then your assets are tied up until someone else figures it out for you.

If your situation is very simple (without children), then you can effectively prepare a will online. If you have any complexities at all (including children), then you need to go a licensed attorney.

 

Day 35

This week has been all about managing risks. You learned that risks come in many different forms. The risks of the stock market can be scary, but the risks of losing your job can be even more financially devastating.

Emergencies often occur in the aftermath of what you originally consider an emergency. Being prepared for anything can help even the toughest situation. Make sure that you have asked yourself the three toughest questions:

• What will you do if you lose your job?
• What will you do if you become disabled?
• What will your family do if you die?

You also learned the importance of having an expert help you with your insurance. Try to keep your home and auto insurance with the same company because it will save you money. Also, review these coverages annually.

Make sure that if you have a young family, then you have the proper life insurance coverage. This usually equals between 7-10 times your income. Yes, this seems like a lot of coverage, but it’s not. You can do this in a very affordable manner by buying term insurance.

Finally, make sure that you have your final wishes documented in some legal form. Don’t leave these decisions to a grieving family. You need to legally document who would take care of your children in the event of your early demise. It is incredibly irresponsible if you don’t.

Next week we will talk about understanding your benefits, and preparing a career backup plan.
 

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