8 Steps to Financial Security for Newlyweds

California-NewlywedsThe-Name-Equality-Act

Among the less romantic aspects of merging two lives through marriage is the coordination of all things financial. Despite the tedious nature of these activities, it is vital that newlyweds give adequate attention to setting up a strong financial foundation for the union.

Financial stress can create problems for any marriage, even for couples with many years under their belts. According to the American Psychological Association’s annual Stress in America report, 31 percent of couples identify money as a major source of conflict in their relationships. Start your marriage off right by following these 8 steps to secure your collective financial future.

Establish a Joint Checking Account

Having an account to which you both have access (even if it is in addition to existing separate accounts) is helpful for a number of reasons:
• The Federal Deposit Insurance Corporation (FDIC) and National Credit Union Administration (NCUA) both provide $250,000 worth of federally-backed coverage per depositor on every account you open. Should you find yourself with an account in excess of that amount, it would be covered up to $500,000 if both spouses are listed as depositors.
• Finances are simplified when you have a shared account from which to pay shared expenses like utility bills, household maintenance costs, and vacations.
• Managing your finances collaboratively can make your marriage stronger as you consistently practice open communication and collective decision-making.
• Joint accounts bypass the probate process in the unfortunate event of one spouse’s death.

Create a Budget

Know what your money map looks like and work together to follow it.

• Agree on a spending to savings ratio.
• Consider your existing debt, develop a plan for reducing it (hint: pay off debt with the highest interest rates first), and decide how much debt you are comfortable carrying as you move forward.
• Prioritize your discretionary spending. For instance, between vintage wine collecting and a desire to travel, which do you value most as a couple?
• Identify future potential expenditures (both fun and functional) and decide how saving for those fits into your budget.

Coordinate Work Benefits

Figure out what perks you have at your disposal and make the most efficient use of them.

• Define your medical insurance needs and decide if it would be more economical to add one spouse to the other’s plan. Be sure to consider any future family growth and the additional cost of dependents when making this decision.
• Ensure that both spouses are making the most of company-matched retirement benefits. This is like free money for your future.
• Examine additional benefits that each employer offers (life insurance policies, medical savings accounts, charitable contributions, etc.) and see how you can take advantage of those most effectively.

Reassess Your Current Investments

The strategy you had as a single person may not meet your needs as one half of a couple.

• Consider a diversified investment strategy to mitigate fluxuations in various segments of the market. If circumstances cause one fund to flatten, make other investments which are likely to surge under those same conditions.
• Discuss your investments to make sure that they reflect your collective values.
• Have a mix of short and long-term investments about which you are both reasonably knowledgeable.

Evaluate Your Protection Plans

Hoping for the best, but preparing for worst includes providing for unexpected bumps along the road.

• Recognize that career or health dilemmas that affect your personally, now affect your spouse as well.
• Make sure that life insurance policies provide adequate coverage to mitigate a sudden loss of one income for at least as long as it will take the surviving partner to adjust.
• Consider disability insurance to prevent financial chaos if one or both spouses become temporarily or permanently unable to work.

Update Beneficiaries

As with a joint checking account, insurance policies with a legally designated beneficiary bypass the probate process and go directly to the intended recipient. Make sure the appropriate beneficiary is named on all of your existing financial accounts and policies.

Completely Implement Name Changes

This is neither the time nor the place for an identity crisis.

• Know your state’s law with regard to legal name changes. If your name was Hilda Elizabeth Jones and you wish for your legal married name to be Elizabeth Jones Anderson, find out how to go about this in accordance with state law. The same goes for hyphenated surnames.
• Once you’ve established your new legal name, make sure all of your financial accounts reflect it.

Maintain an Emergency Fund

This is part of hoping for the best and preparing for the worst.

• Open another joint account to which both spouses have access.
• Preserve a balance that is appropriate to your financial situation. It should equal 3-12 months of your collective household income.
• Only use it for true emergencies.

Following these guidelines early in your marriage will establish a solid foundation on which you can build a bright financial future together.

Failed Founders Make Great Hires

marc firestone business

One of the hidden truths of the 21st century economy is that while many people would like to run their own business, being able to sustain that endeavor sometimes takes more than talent and ingenuity.

It is easy to see this when you look at crowdfunding and sites like Kickstarter. You see a project that represents the efforts of a group of founders. Even if they are funded and are successful in putting their unique product out, most companies that get launched using crowdfunding are actually fading away after a couple of years. The primary reason for this is that their ideas excite the established players in the industry. They in turn develop products that compete with the innovators. Their size and scale then makes it difficult for the innovators to maintain their niche market.

The upshot is that there are a lot of talented founders that would make excellent hires at established firms.

Here are some reasons that bringing on a former founder can help your firm:

Experience with market vagaries:

People that have run companies that have faced adversity are typically very adept at manuevering in environments that are unforgiving. They know how to perservere and they can often improve your processes because they have had to innovate in a high gravity environment.

When it comes to navigating markets that are complex, you may find that a failed founder outperforms someone who has not had experience factoring in considerations like the global nature of your product.

A network of friends:

Every founder that runs a business is used to interfacing with people that at the top of the business world in their own markets. They are both comfortable working with people that are executives- and they know how to leverage their connections in order to help whatever company that they work for.

It is a good idea to recognize and embrace new employees’ networks as something that can be a real positive for your company. If you fail to prepare your staff for this, there can be friction because your new hire may end up looking like they are stronger than their co-workers.

A realistic attitude about their role:

When you hire talented individuals, it is sometimes difficult for you to keep them because competitors tend to try and pull them away from you. On the other hand, with the Millennial Generation comprising a large share of the work force, companies are used to working with people that are looking for an opportunity to run their own business at some point in life.

If anything, a seasoned veteran that founded another company may have a very realistic way of looking at the opportunity that you provide them with. Instead of succumbing to the first opportunity that comes along, they may be more willing to work inside your firm to help your company grow.

A need to prove themselves again:

If you are in a competitive market, it is always nice to have corporate warriors around to help you out. Hiring a failed founder can be positive for your company because they may want an opportunity to shine from a performance standpoint. They will therefore do what they can to improve your bottomline in a measurable way.

In many ways, it can be like a football coach that was known for being brilliant until his team had a bad year or two. Most coaches in that situation go back to work for another coach and end up being very strong contributors. Brady Hoke, who used to coach the University of Michigan was recently hired at the University of Oregon as a defensive coordinator because of his talents. Lane Kiffin, the former coach at the University of Southern California was hired at the University of Alabama as an offensive coordinator because of his ability to contribute. He has since helped Alabama return to the National Championship game.

So when it comes to looking at those that have experience working as a company founder in a company that did not survive, it is worth considering how much impact motivated talent can have on your organization. If you make everyone on your team aware of the talents that someone is bringing with them to help, you should be able to leverage their experience and connections to your company’s benefit without inciting the normal jealousies and infighting that sometimes come along with bring a talented person onsite.

The Best Way to Talk about Life Insurance

 

Option5Talking about life insurance can often times be a tricky and uncomfortable subject with people. In fact, a majority of the public are uninsured simply because they do not want to have a discussion about the idea of death. But why does this talk have to be so difficult? Shouldn’t everyone want to be advised about how to further better prepare for the future? While this is true, one thing you need to understand is the emotional mindset people associate with life insurance. Once you are able to get into this perspective, then you will be able to provide the most educational information for your clients.

When selling life insurance, you want to enter in the mindset of an educator and teacher. Treat every client as a blank slate. Most case scenarios, clients are either unaware or uninterested in life insurance. Your first job is to grab their attention. Like any sales representative, you need a way to have them listen. Forcing a group of people in a room to listen to you speak for fifteen minutes is not the most effective way to pull clientele. The best was is to hook them with a strong introduction. Start off with a variety of questions or even tell a story. The more relatable the introduction is to the person, the more interested people will get.

Once you have established a strong introduction, it is time for you to talk about life insurance. During this process, it is important that you are both informative and relatable. To be relatable, you want to keep in mind that some of the information may be too complex for people to understand. Simplifying this information in more relatable concepts can really hold the attention of the entire group. Do not mistake this for not providing any information. Life insurance is a very complex topic that needs to be broken down before someone can make a commitment. Providing this information, in the most simplistic understandable way, will keep the attention and interest of your customers.

As you present your information, make sure you are also personable and honest. The topic about death can be a very taboo discussion. Relating your own experiences and the value that life insurance brought to your life can ease people’s tension. Even if you have not had a personal experience with life insurance, talk about the securities it can have for the people you care about. Create hypothetical examples of why life insurance is necessary and why they should get it for themselves.

Last but not least, answer all questions. Many people still have a variety of questions about how the overall process works and what they should do if they want to start, continue, or transfer from one life insurance to the next. To do this, it would be in your best interest to stay an additional ten to twenty minutes just in case there are a few people who want to talk to you. Also, do not be afraid in approach people individually if they have any questions. Sometimes, people will reframe from asking their question because they are timid in speaking in front of a large group of people. This will give you an opportunity to continue educating those who want to learn more and also potentially gain a client.

Why you Need Life Insurance When you are Young

life-insuranceIn today’s modern age, the idea of exploring and traveling has become incredibly prevalent within many young professions in their early twenties to their mid-to-late thirties. As exciting as traveling can be, we must also understand the dangers one could get from those trips. Even if it is a quick weekend trip in the woods, you never know what could happen.

If you are single, it would be to your best interest to start thinking about life insurance. Now I know what many of you are thinking. You don’t have the financial responsibilities of another person or life. You want to use that money for something more gratifying. You do not plan on dying any time soon. While all of these are true, life insurance is used more than just a tool to keep your family financial stable during the loss of a love one; in fact, it provides you with many advantages especially at a young age.

debtjpg-8025cd82f36e31a6Pay off your debts:

As a young professional, many of you are beginning to assimilate into adulthood by purchasing your first car, home, or even credit card. Unless you have been paying in full, many of you have begun accruing debt in the most reasonable way possible. However, if something were to happen to you, your life insurance would be able to financially fund your various debt leaving you’re parents or guardians free from the financial burden.

Locking in a good life insurance rate:

At a young age, you can get an affordable life insurance plan at a very reasonable cost. Locking that rate in a long-term policy can be advantageous especially in the future if you are going to get married or going to have children. Imagine buying a 30-year term life insurance policy. For those thirty years, you will be paying the same amount as the price you purchased it. This will provide you incredible coverage and a financial safety net to alleviate you of any extreme situations.

papercutoutsHelping the family

Life insurance delivers additional features that provide legacy planning for your immediate family members. Imagine how many people can benefit from your policy. It is of course hard to conceptualize, but that is what it is when you are planning for the future. You need to begin thinking about the unknowns and the worst-case scenarios to better protect you and your love ones even if you do not have a family of your own. Your policy could do a variety of things. They can send someone in your family to college, they can pay off your parent’s expenses, or they can even contribute to a cause or charity that you are passionate about. Regardless of how it is used, it will create a lasting legacy for your name.

6 Quick Facts About Life Insurance

family-593188_640Life Insurance can be a tricky topic and often times people are not really sure what they should be buying when it come to a life insurance plan. This misunderstanding has led to a significant portion of the population being left uncovered or inadequately covered by their life insurance plans. I found this great article which outlines some myths of life insurance that I thought would be important to share. Hopefully these facts below will help you understand the true reality of life insurance and how you can best protect you and your family.

1) Group life insurance coverage through work is not always enough. Although rates can be lower through group coverage, people insuraged only through group life insurance have the lowest average amount of coverage and often need supplemental coverage.

2) If you lose your job then you lose the life insurance coverage provided through your employer. While some states require providers to offer the option of rolling over term coverage into an individual policy, not all states do. Make sure that if you lose your job that you ensure you are properly covered going forward.

3) Most people think that when the have their first kid is when they need to purchase life insurance. However, 72% of married workers actually have life insurance and just 75% of married couples with young children have life insurance.

4) Many people think that you have to pay taxes on the death benefit from a life insurance policy, however, in almost all situations, benefits paid upon death are not taxed.

5) A common belief is that if you don’t have children then you don’t need life insurance. Life insurance is important for anyone who provides for others, regardless of if you have children or not. If you have large private student loans, you are supporting your partner or other family members, or you share a mortgage with a partner, then life insurance is a good idea. For those with children, however, a life insurance policy should be a necessity.

6) Most people are offered life insurance plans through their employer. In fact, 56% of all workers had group life insurance coverage through their employers in 2010.

One Combo, Please

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Paying for long-term care always raises the question: “Is it really better to be safe than sorry?” For many people, this kind of insurance would be immensely valuable if they ever found themselves in need of a nursing home, assisted living, or palliative care. Proponents may try to scoop up these policies no matter what, with the familiar kafkaesque chorus of “better have it and not need it, than need it and not have it.” However, there’s a mighty cost issue. If you never need this type of attention or treatment, then you have, quite frankly, wasted thousands of dollars. Luckily, Orange County Register’s Barbara Marquand reports on a policy that combines long-term care with life insurance.

 

Basically, these combination packages allow you to take the safe route, as your money goes towards long-term care not generally offered by Medicare or health insurance. If you don’t actually wind up using these benefits (or if you don’t max them out), the policy will pay out a benefit to your beneficiary. Marquand provides a very understandable breakdown in her article, but as you’re reading this, keep in mind the key takeaways:

  • The average cost of these policies is around $75,000, and the benefits of long term care are several more than your premium payments.
  • The long-term payout and the beneficiary’s payments will be in some sort of equilibrium. The less long-term care you receive, the more money is paid in the death benefit, and vice versa.
  • Your current state of health will play a role in the overall cost for coverage, or whether you can receive it at all. Some issuers require a physical, for example.

 

Although these combination policies offer a number of benefits– like acting as solid investment and potential money back guarantees– keep in mind that they are expensive. That $75k includes the long-term care, so if you don’t actually think you’ll need it, you’re probably better off passing over the combination for a life insurance-only policy. In that case, it is better to search for a more traditional life insurance policy. It is also ill-advised to opt for a combination plan if you are only in need of temporary life insurance. Lastly, if getting this combination means going broke, stay away. There’s no need to risk everything when you’re not even sure if you’ll need the offerings.

 

Marquand parts with a few words of advice for those who may decide on the combination. In addition to comparing quotes from various agencies, definitely be sure to look into their financial strength ratings. You don’t want to wind up depending on your policy if they can’t pay out!

 

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