GYST's Guide to Money and Emergency Planning
What does estate planning and your finances have to do with each other? Turns out, a lot.
How to Get Your Money Together
Who (and how) you leave your assets and money to means you have to know what you have, where it is, and more often than not - there is some shit to get together here. In the very best of circumstances, a will document is only looked for after your long, happy life surrounded by loved ones has come to a fulfilling close.
However, how solid your money situation is dramatically impacts how well you are able to handle the unexpected should things go sideways. Which sometimes happens, too.
Getting your estate planning together is the "gateway document" to a bigger, better more badass 360 view of your life - and that means:
1. Have an Emergency Savings fund
- Enough to cover your expenses for 6 months (min) is recommended.
- It should be ‘cash’, as in accessible quickly (long term savings, CD ladder, etc)
- But, not too accessible so you can’t dip in and out of it (leave it alone).
What is it for?
- Loss of income, you lose your job.
- Medical emergencies, you are ill or hurt.
- The unexpected, like travel costs for a family funeral or illness.
- Housing emergencies, the furnace breaks, roof leaks, etc.
- Transportation, if the car breaks down but is critical for work.
2. Fund a Retirement Savings
Start early, even if it means paying the minimum on your student loans for a while (look at income-based repayments if you qualify).
GYST Tip: Think you can't save? Siphon off a few percentage points of your income automatically each month and see if you miss it. If you don't, siphon another percentage point the next month. Then another.
3. Lower your Debt
- General advice is to always pay down highest interest rate first
- Pay more than the minimum balance
- Is your credit rating being impacted by your debt, payment history?
4. Check on Insurance: do you need to shore up any vulnerable spots?
- No emergency savings and high expenses?
- No retirement savings, health issues?
- Growing family with young kids and mortgage?
Top 10 Money Mantras: Advice to Live By
- Spend less than you make. Period.
- Make a Budget: There are free online tools that do most of the heavy lifting.
- Follow your Spending: Even just for a month, see where it all really goes. Track your progress & celebrate your success.
- Review Your Bills: Go through your monthly bills in order to find and eliminate excess regular expenses.
- Get interest rates down on credit cards: call and ask, shop around.
- Plan Ahead: Save up for trips, buy groceries for the whole week.
- Pay yourself first: Set up auto-payments to saving accounts to make sure you don’t spend your savings.
- Spending less on little things adds up: Bring lunch to work and take public transportation instead of paying for parking = $15/day adds up fast.
- Shop Smart: Compare prices first, buy things on sale, ask for a discount.
- Value what you have: Take care of your stuff and maintain it so it lasts longer, fix and repair things instead of buying a new one.
Best money advice of all time? "Find the joy of living within your means." - Sandy Fernandez, AOL Money
Where to Start: Tips to get a grip on your money
There are many different ways to slice and dice the basic rule of "don't spend more than you make". One of them is called the 50/20/30 Rule and is a nice, basic place to start, this example comes from a LearnVest article and breaks your money down like this:
- 50% Essential Expenses and only four things are allowed: housing, transportation, utilities and groceries.)
- 20% Financial Priorities include things like an Emergency Fund, paying off Debt, and saving for Retirement
- 30% Lifestyle is everything else, what fits into the ‘voluntary and fun’ category: eating out, pets, entertainment, cable tv, hobbies, charitable giving, personal care, etc.