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It’s the one personal finance topic people often try to avoid, even though they know they shouldn’t. Estate planning refers to a number of activities dealing with how decisions are made, and assets are handled and disposed of just prior to and following death or incapacity.

While far from the most upbeat of topics, it’s a very important one to contend with, nonetheless. But rather than focus on specific estate planning strategies, let’s consider the potential benefits of addressing this issue at all.

Leave a legacy. Many people want to leave something tangible to those they love, whether to their children, grandchildren and great-grandchildren, nieces, nephews or friends. Knowing that your lifetime of hard work and saving can make affording college, buying a first house, a car, or starting a business easier or possible for someone you love can be gratifying. A final will and testament spells out the specifics of how your assets are disposed of. And you can also leave an explanatory letter to your beneficiaries to let them know what they meant to you, why a gift was made and how you hope your bequest will help enrich their lives.

Unburden your loved ones. Making difficult end-of-life medical decisions can be stressful and anxiety ridden for those who care about you. But this is a burden you can take off their shoulders by putting in place advanced directives — otherwise known as a living will — that express your wishes for continuation of life-support and other medical decisions if you aren’t able to make them for yourself. And it’s a very loving thing to do for your children or other family members

Support a charity. Do you have a charity that means a lot to you? You can leave a lasting gift by remembering that nonprofit organization in your will. Whether you want to support curing childhood diseases, environmental efforts, animal welfare, or a church, synagogue or mosque, you can take comfort in knowing that you’ll help support the causes that matter most to you even after you’re gone.

Take control. Estate planning in some ways, is the ultimate assertion of control over your final destiny. Whether through the establishment of a trust, the creation of a will or the documentation of your advance directives, you’ll be able to maintain greater control over important decisions throughout your life and beyond.

Remember, estate planning isn’t only for the wealthy. Everyone will have to make end-of-life decisions that have tremendous consequences for themselves and their loved ones. Once you have all the essential documents in place, you most likely will not have to revisit these decisions very often. And with an appropriate estate plan in place, you can get on with enjoying your life in the here and now.

Inflation, whether steady or steep, can have a negative impact on your savings if you don’t keep pace with it. This means that while you may be prepared for a financial emergency now, you might not be down the road. And particularly when a recession complicates the picture, padding your emergency account can be a lifesaver. If you have three months of expenses currently saved, try to increase that amount to six. If you have six months in the bank, see if you can sock away nine months’ worth. At the very least, aim to increase your savings by the same percentage as the current inflation rate to help keep you prepared in a climbing interest rate environment.

Though it’s important for investors to be cautious during recessionary conditions, there can be a potential upside when interest rates rise — investors can see higher returns on their savings. For any money you might need to access on a moment’s notice, minimize risk as much as possible while maintaining high liquidity. Here are some types of accounts that can be appropriate for an emergency fund.

High-interest Savings

You can save money in an FDIC insured high-interest savings account to generate a higher interest rate than most traditional savings accounts. And the extra interest you earn could help bridge the gap between your savings and the current inflation rate. You may find the best deals with online high-interest accounts.

Laddered CDs

A laddered CD is when an investor divides a lump sum into multiple CDs that mature at different times, so the investor can receive periodic payouts. Staggering maturity dates may also allow you to take advantage of changing interest rates. This strategy can help lower overall portfolio risk as well, which may be important for something as critical as an emergency fund. 

Money Market Accounts

In exchange for higher interest rates, many money market accounts (MMAs) have minimum deposits of $5,000 or more. They have relatively high liquidity, but the number of transactions per statement period are typically limited (often to around six per month). MMAs also often have debit features that give them more liquidity than CDs or even other savings accounts.

Don’t Compromise Your Future Financial Wellness

No matter which savings strategy you choose, try to avoid dipping into your 401(k) or other retirement account. These are intended to be long-term, non-liquid investments that are meant to mature when you’re ready to retire. The taxes and fees alone for early withdrawals can reduce what’s available to you in the short term to the point where the money might not cover a significant emergency. Plus, those funds can’t be put to work in the market while they’re divested — and you may miss out on valuable growth opportunities if stocks rise. The kind of account that’s best for you depends on your financial situation, so speak with a financial professional before committing to one strategy.

Sources

https://www.bankrate.com/banking/mma/what-is-a-money-market-account/

https://www.investopedia.com/terms/c/cd-ladder.asp

From guidance counselors and parents to your soccer coach and nosy neighbors, everyone seems to be interested in where you’re planning on going to college. And with good reason — there’s a lot to consider when making this important decision, beyond just picking the right university or vocational school and figuring out your major. Education costs money … a lot of it. But with some practical planning, there are ways to rein in college costs even if your college fund hasn’t caught up with your dreams quite yet.

Figure out What You’ve Got to Work With

Have the “money talk” with your parents. Find out if they — or your grandparents — have funds put aside for you like a tax-advantaged 529 college savings plan. If they do, know that the impact on your financial aid is different based on whether your parents or your grandparents started the account. And don’t forget to ask for money toward your college fund for birthday presents and holiday gifts to bolster your savings.

Stretch Your Budget

Rather than going straight to a four-year school, consider spending your first year or two at a community college. Community college can cost much less — plus, you could potentially save on living expenses by commuting. You can then transfer to the school of your dreams in a year or two to dig into your major.

Plan Your Way Out of a Jam

Talk to your college advisor about the feasibility of graduating early. Look into concurrent enrollment programs that allow you to take reduced-cost college classes while in high school. AP testing and CLEP tests can also help you receive credit at a reduced rate and speed up your graduation date. Graduating even one semester early can save you thousands of dollars in tuition, housing and other expenses.

Scholarships Are Free Money

In addition to academic and sports scholarships, there are also community-based, gender and subject area scholarships. Once you’re in college, you can work with your major department or honor society to take advantage of these programs. Look into smaller scholarships as well. Sometimes they’re easier to get, and a lot of small scholarships can add up to more money. And don’t forget about grants if you have financial need. Many states and colleges offer their own need-based grant, research and scholarship programs that you can apply for.

Work-study and Summer Jobs

Instead of taking out more student loans, look for opportunities to participate in federal work-study. These are programs that provide you work during the semester and can help you reduce the need for debt. A summer job can build up your resume and help toward paying your college expenses for the coming year.

Get Ahead of Debt

Make sure you fill out the Free Application for Federal Student Aid each year to take advantage of grants, work-study and some scholarships. Speak with a financial professional to help you take steps now to sidestep serious debt and make your transition into life on your own as smooth as possible.