In today’s world of spiraling costs, everybody needs to have their finances prepared and organized to meet sudden financial emergency. Smart people have a financial first aid kit ready to meet unexpected crises. If you care for your financial future, you need to get smart and ready a financial first aid kit for yourself. This brings us to our next question, how to prepare a ways by which you can have a financial kit ready. financial kit. Given below are
1. Emergency Savings Account
The first step towards safeguarding your future is to have an emergency account. The purpose of this account is not to grow your money but to keep it safe. You dip into this saving only in the event of sudden job loss or meet unexpected medical bills. To build this account you need to ear mark a portion of your family budget every month and funnel it into the account. You can set your own savings standard, like having enough money stashed to meet three months expenses.
2. Life Insurance
This element in your kit is more for your near and dear ones than you. With timely investments you can have timely returns which can help you meet many unforeseen developments. In case something happens to you, this element can be the most crucial aid.
3. Retirement Account
Having a retirement account is always advisable. While on the one hand they are tax-deferred accounts on the other hand you have something to fall back upon to meet immediate and lump sum expenses especially after retirement.
4. Good Credit Score
Having a good credit rating is one thing which every forward looking person should aspire to have. This can help one easily get loans when one needs it the most. The only way to maintain or build a good credit score is to pay more than the minimum payment you are required to pay, by never paying beyond the due date, and by not allowing the available credit to fall less than 50% of the total available credit.
5. Education savings plan
Starting saving on a college savings plan can be hugely beneficial. It takes care of the future education expenses you may have to undertake. With this worry away, you can get rid of a big headache. You can get a college fund account for low fees as well as a tax break. Some of these plans even offer tax-deductible from your state income tax. When you withdraw the money for use, it will be taxed at student’s income tax rate. If need be, you can transfer the money for another beneficiary or use it for some other purpose by inviting a penalty of 10%.
When you have a will ready, you assign a guardian for your children. Without this there may be many claimants especially if your claim to something is disputed. It is also important to make sure that the nominees on any 401(k) plans, bank accounts, life insurance and IRAs are also up to date. This will ensure that the money goes to the right person in case of any unfortunate development.
These elements are essential to any good financial kit. Once you have these in place you won’t find it difficult to grapple with financial crises of any magnitude.