Is your L.I.F.E. planning in order?
Financial planning isn’t just about saving money—it’s about preparing for life’s uncertainties and ensuring financial security for yourself and your loved ones.
That’s where the L.I.F.E. acronym comes in, serving as a guide to four key areas: Liabilities, Insurance, Final Expenses, and Education. Addressing these financial pillars can help you build a solid foundation for the future.
Liabilities: Managing Debt and Financial Obligations
Liabilities include any outstanding debts—mortgages, car loans, credit cards, student loans, or personal loans. Without a plan to manage these, debt can quickly become overwhelming.
How to take control:
- Create a strategy to pay off high-interest debt first (the avalanche method) or pay smaller balances for momentum (the snowball method).
- Consider consolidating debt for lower interest rates.
- Ensure you have a plan to cover liabilities in case of unexpected life events, such as disability or loss of income.
- Budget and plan to live below your means.
Insurance: Protecting What Matters Most
Insurance serves as a financial safety net, protecting you and your loved ones from the unexpected. Having the right coverage can mean the difference between financial stability and hardship.
Types of insurance to consider:
- Life Insurance: Ensures your family is financially protected if something happens to you. Should be enough money to cover liabilities, income Replacement, final expenses, education, and other. Approximately 10-12 times your annual income is appropriate for most people.
- Health Insurance: Covers medical expenses, preventing large out-of-pocket costs.
- Disability Insurance: Replaces income if you're unable to work due to illness or injury.
- Home and Auto Insurance: Protects your property and assets against damage and liability.
- Long Term Care Insurance: Helps pay for the cost of future nursing home care/assisted living expenses. Nursing home care can deplete retirement saving quickly as the average cost is over $100,000 annually.
Final Expenses: Planning for the Inevitable
Final expenses include funeral costs, medical bills, and outstanding debts left behind. Without planning, these costs can create a financial burden for your family.
How to prepare:
- Consider a life insurance policy that covers funeral expenses and outstanding debts.
- Set aside emergency savings or a designated account for final expenses.
- Outline your wishes in a will or estate plan to ensure assets are distributed as intended.
- Make sure you have an estate plan in order to ensure smooth transfer of assets to beneficiaries.
Education: Investing in the Future
Education is one of the most valuable long-term investments, whether for yourself, your children, or future generations. Planning for educational expenses can ease the financial burden of tuition and related costs.
Smart strategies for funding education:
- Open a 529 College Savings Plan or Education Savings Account (ESA) for tax-advantaged savings.
- Apply scholarships, grants, and work-study options to reduce student loan debt.
- Consider a Roth IRA for education expenses/retirement. Has the flexibility to be used for education or not and also save for retirement.
Be in control of your L.I.F.E.
By addressing Liabilities, Insurance, Final Expenses, and Education, you create a comprehensive financial plan that protects your present and secures your future. Whether you're tackling debt, securing insurance, planning for final expenses, or investing in education, every step brings you closer to financial confidence and stability.
Take control of your financial future today—because planning for L.I.F.E. is one of the smartest moves you can make.
Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. The credit union has contracted with CFS to make non-deposit investment products and services available to credit union members.