7 Simple Steps to True Financial Freedom – Part 3

Several months ago, I started a series called, “7 Simple Steps to True Financial Freedom.”

In the coming weeks, we’ll take a look at each step, in detail, so you can learn how to make 2016 your best money year yet!

Just as a reminder, below is a brief outline of the steps I mentioned in that original blog post.

We’ll call these steps, The Stewardship Plan™…

1. Start with giving.
2. Take care of the basics.
3. Establish an emergency fund.
4. Wipe out high-interest debt.
5. Add a rainy day fund.
6. Reach your long-term goals.
7. Don’t stop giving!

In this post, we’ll cover step 2, where we explore a few ways you can get some “quick wins” when it comes to your money.

It’ll be kind of like throwing darts…except this target is huge and you can hardly miss!

Below are a few basic building blocks of a good financial plan that tend to be gaping holes in your finances that most people probably didn’t even know were there.

So, what are we waiting for?

Let’s get started!

1. Insurance coverage

One of the first things to consider when developing a rock-solid financial plan is what type of insurance coverage you need and what type of insurance coverage you currently have.

If the two don’t match up, then there’s an opportunity for improvement!

Below is a list of some common types of insurance coverage you might need, depending on your situation…

• Health insurance
• Life insurance
• Auto insurance
• Homeowner’s/renter’s insurance
• Long-term disability insurance
• Personal liability umbrella policy
• Professional/business liability insurance

Obviously, everyone’s situation is different so the types and amounts of coverage you need will vary greatly depending on your circumstances (check out this blog post for more info on the types of insurance coverage listed above).

Just as important, there are probably some types of insurance coverage you probably DON’T need. Check out this blog post to see a list of some commonly sold policies that might be best to avoid in the future.

Make sure to work with an independent insurance agent alongside your fee-only financial advisor to get independent and unbiased insurance advice, personalized for your situation.

2. Company benefits

Another important hole to fill in your financial plan is making sure you’re advantage of certain benefits offered by your employer.

Unfortunately, this is a broad category and there are just as many options as there are clients, so it’s hard to give too many hard and fast rules.

With that said, below are a few examples of things I see people fail to utilize on a regular basis that their company is already paying for, but they just didn’t realize it…

• Company retirement savings match

If your company offers a matching contribution to a retirement plan and you’re eligible, then, as a general rule, it usually makes sense to take advantage of it!

One exception to this rule might be if you have a high amount of credit card debt or other high interest rate debt. In that case, it might make sense to skip the match for a short period of time until you pay off some or all of your debt.

• Company paid benefits

If your company is paying for things like health insurance, disability insurance, life insurance, etc. then make sure to utilize any benefits you’re entitled to when the time comes.

For example, most health insurance offerings are now required by law to offer free preventative care, such as annual physicals and certain vaccinations. You or your company are already paying for it…you might as well take advantage of it!

• Company offered benefits

Sometimes there are benefits your company offers, but that do cost you money out-of-pocket. Even so, some of these benefits might make sense to take advantage of in your situation.

For example, signing up for a prepaid legal plan for one year so you can get basic estate planning documents drafted might be less expensive than getting the same service outside of your employer’s prepaid legal network.

To see what benefits you might be missing out on, talk to someone from your human resources department to get a full list of benefits available to you and discuss these options with your financial advisor before your next open-enrollment period.

You never know what kind of free stuff you might be missing out on!

3. Estate planning tools

Last on our list of basic financial planning tasks (but certainly not least!) is to secure several essential estate planning documents.

Now, estate planning is part of a larger “wealth transfer” process, but the reality is, the documents and items listed below are a bare minimum that every adult in America should have…

• Will – This document tells people who gets your stuff if you die. It also names the guardian of any minor children, should the unthinkable happen. A revocable living trust, in conjunction with a pour-over will, may also make sense, depending on your situation.

• Durable Power of Attorney – This document gives someone the ability to make certain decisions, such as financial decisions, on your behalf if you’re otherwise unable to communicate your wishes.

• Medical Durable Power of Attorney/Healthcare proxy – This document gives someone the ability to make medical decisions on your behalf if you’re otherwise unable to communicate your wishes.

• Living Will/Advance Directive for Health Care – This lets the doctors and hospitals know what type of life sustaining treatment, if any, you desire should any “end of life” decisions have to be made and you’re not able to make them. Depending on your state, this may be combined with the medical power of attorney document listed above.

Another item most people don’t have is an “In Case of Emergency” box or file.

This tool holds all of the documents listed above, as well as other important items a loved one might need access to in the event of…you guessed it…an emergency.

I’ll cover more about this tool in detail in a future post, but signed copies of all estate planning documents, personal letters to loved ones, a list of online accounts and their passwords, as well as a list of any financial accounts are just a few of the items that you should include in your I.C.E. box.

Your estate planning documents will obviously need to be drafted with the assistance of an estate planning attorney, but the I.C.E. box is something a good financial advisor (like SageOak!) will help clients with on a regular basis to give your family that extra peace of mind they deserve, should the unthinkable happen!

On to step 3…

Well, that covers step 2 of The Stewardship Plan™!

These are some basic items vital to the long-term success of most financial plans.

Next up…

Step 3 – Establish an emergency fund.

During our next post in this series, we’ll take a detailed look at the prudent necessity of an emergency fund.

We’ll talk about why you need an emergency fund, how to determine the right amount for your emergency fund, and the best place to save/invest this money.

In the meantime, click here to email me with any questions you have or use the sign-up form below to schedule a complimentary initial phone call…

Click to Schedule Initial Phone Call

Together, we’ll explore whether or not our firm is a good fit to help you reach true financial freedom!