April marks the beginning of Financial Literacy Month, a time to not only celebrate but review your finances and take steps to improve them.
To do this, you’ll first want to evaluate the state of your current finances. Then, consider how you can advance them. To help get you started on the right foot, be sure to read through these three ways to manage your personal financial risk before you head into April.
1. Invest in Life Insurance
A good-standing financial plan starts with life insurance, as it’s one of the only ways to ensure you and your dependents are protected in the event that you pass away. This is especially true for those of you who have a spouse, kids, struggling parents, or any other loved ones whom you look after with your finances. Having life insurance helps guarantee they’ll be taken care of no matter what, and that any debt, housing, or medical expenses are accounted for.
Now, depending on certain variables such as your age, family, living situation, debt and financial goals, how much life insurance you’ll need may vary. Consequently, this may also affect which company and type of policy contract you sign up for.
Generally speaking, a term life insurance policy — a plan that’s set for a specific period of time called a “term” — will suit most people’s needs. Regardless of it being 20 years or 30 years, a term life insurance policy is typically ideal, but don’t be afraid to explore your options with the experts at Quality Term Life. They also offer an online needs estimator so that you can know exactly how much life insurance is right for you.
2. Look Into Real Estate Investments
Owning a house can save you a lot of money in the long run, if done correctly. Aside from the intangible benefits — pride of ownership and a sense of stability — it also offers tangible benefits including equity and tax deductions. These advantages serve to support your finances over time.
Still, owning a home is a huge undertaking and requires significant time and consideration. In comparison to leasing, homeownership is usually more expensive, even if the mortgage payment is less than the rent, due to factors like property taxes, water and sewer service, and trash removal.
That’s why it’s important to ask yourself, “how much house can I afford,” before deciding on whether or not you want to buy a home or rent. Doing this will allow you to adequately assess your finances, find a home that’s within your price range, and help build your wealth down the line.
3. Maintain Sufficient Emergency Funds
Part of financial planning means preparing for the unexpected. Best-case scenario or worst-case scenario, it’s never a bad idea to have an added layer of financial security by making use of emergency funds.
An emergency fund is meant to be just that — funds used for emergencies only. It’s not meant to be a secondary bank account that can be used at your leisure, but rather, a place to lock in additional funds you might need someday as you continue to deal with the unexpected throughout the course of your life. Whether it’s losing your job or having to pay for the medical bills of a sick child, building and maintaining sufficient emergency funds can allow you to weather the financial storm that comes from such events.
That said, be sure to regularly add to this type of fund so that you can prepare for low impact and high impact financial issues. For best practice, try to maintain three to six months’ worth of living expenses in your emergency funds as this will make it easier to navigate through these unexpected circumstances, no matter how low or high the impact it may be.