8 Small Steps Toward Financial Protection

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8 Small Steps Toward Financial Protection
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1. Create a budget.

• The first step toward getting financially fit is
  to create a budget. Everyone needs an
  understanding of how much theyre earning, how
  much theyre spending, and how theyre going to
  meet their current and future financial goals.
  The Federal Trade Commission has information on
  how to create a budget. Once you outline your
  budget, make sure to stick to it. Also make sure
  to regularly revisit it and adjust it as needed.

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2. Control and minimize debt.

• Your budget will help you keep track of where
  your money is going. It will also help you
  identify areas where youre overspending. Its
  critical to cut out any excess spending. Also
  work to minimize your debt load. So long as you
  have debt, youll be responsible for paying
  interest. (So definitely make an effort to pay
  more than the minimum on your credit card each
  month!) Set goals to pay off your debt and track
  your progress. 

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3. Automate an emergency fund.

• An emergency fund is money you set aside for
  unforeseen expenses. They could be an unexpected
  home or car repair or a job loss. Most financial
  professionals recommend having three to six
  months of basic living expenses in an emergency
  fund. However, it takes time to build those
  funds. Automate the process by having part of
  your paycheck deposited into a special emergency
  fund account. You can also have your bank
  automatically transfer funds to a savings account
  earmarked for emergency expenses. Even a small
  amount each week can help you get there. 

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4. Get life insurance Cambridge to protect your
loved ones and review it annually.

• Life insurance provides your loved ones with
  money to maintain their lifestyle if you die.
  This money is known as the death benefit and it
  can replace your income, pay off debts like a
  mortgage, and cover funeral costs. It can also
  help with future expenses like college tuition,
  retirement, and much more. Experts recommend
  having life insurance that equals between 10 to
  15 times your gross income. For a working idea of
  how much you need, use an online calculator like
  the Life Insurance Needs Calculator. Then work
  with an insurance professional to explore your
  options and get the right coverage. Make sure to
  review your life insurance annually or after a
  big life change like buying a new house, having a
  baby, or changing jobs.

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5. Protect your paycheck with disability
insurance and review it annually.

• Disability insurance is one of the best ways to
  protect your most important asset your paycheck.
  Disability insurance typically replaces 50 to
  70 of your earnings if youre unable to work due
  to a disabling illness or injury. An easy way to
  calculate how much you might need is to use an
  online calculator like the Disability Insurance
  Needs Calculator. Make sure to review your
  coverage with your HR department or insurance
  professional as your salary increases.

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6. Keep beneficiaries up to date.

• Its important to update the beneficiaries on
  your financial accounts like your life insurance
  Cambridge or 401(k). This is especially true
  after major life events such as a marriage,
  divorce, birth, or death. Not having the right
  beneficiary can lead to money going to the wrong
  person or delays in disbursing money. 

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7. Put a will in place.

• A will is a document that allows you to specify
  certain things after you die. They can include
  how your assets will be distributed, who will
  make sure your wishes are carried out, and who
  will take care of any minor children. Without a
  will, the state could decide who gets your
  children and more. Fortunately, the process of
  creating a will is not as complicated as many
  people believe. And its well worth it since it
  spares your loved ones from all kinds of
  headaches. A lawyer can help you create a will
  and discuss other issues like power of attorney.

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8. Save for retirement.

• Tap into any  available resources to help grow
  your retirement nest egg. That includes enrolling
  in your companys 401(k) plan or looking into
  other retirement savings options like an IRA.
  Definitely take advantage of any matching funds
  your company makes to your 401(k) contributions.
  Matching funds are like free money. Whats
  more, the contributions you make to your 401(k)
  reduce your taxable income.