/ Category / Planning

Financial planning: Crucial Documents for Every 20-year old

by Andy Masaki

For a lot of young adults, wills and estate planning does not figure out in their list of to-dos when they are in their 20s or something. But, the fact is, it is important that all people regardless of their age have a proper plan in place for their estates right from the very beginning.
For starters, they usually do not require any sort of complex set of tasks to complete; only a strong understanding of some fundamentals regarding financial planning will suffice, especially about some selected documents.

So, here are some of the crucial documents that would help these young minds jumpstart their financial and estate planning endeavors.
Basic documents of financial planning you must have
When planning your finances, it is important that you get in place the below mentioned key personal finance documents:

• Powers of attorney – These documents provide the authorization to an individual, better known as attorney-in-fact, to discharge all the legal as well as financial liabilities and make the decisions pertaining to the same, on the actual owner’s behalf. Moreover, a power of attorney is considered as a what-if document. Being a young adult, it may seem to be unnecessary from your perspective at this moment. But, it is very important and that you need to think seriously over this issue, nevertheless. This is because these documents provide the assigned person an unlimited access to all the assets of the owner, upon his or her unanticipated incapacity. However, most of the time, a power of attorney becomes effective immediately after signing on the dotted line. The problem starts when the assets end up at wrong hands where they could be misappropriated or misused, or even get stolen. Hence, the key is to name only a trustworthy person as your power of attorney.

• Health Care advance directives – Most of the time people get surprised on learning about the rule that prevent them from taking decisions on medical matters that affect their relatives and friends, unless authorized by the person concerned. These instructions are generally mentioned in advance directives. These documents acts as the authorization letter allowing a named individual to take crucial, life-altering decisions on behalf of the other, especially during medical emergencies when the doctors are at a fix and cannot arrive at a concrete decision. To deal with these issues each state has its own set of laws in place that would govern the process of creating advance directives. You could access some of the sample online forms available for free that have been developed by various states.

• Beneficiary allotments – For a lot of young adults, assets linked to their trade or work like group term life insurance or their retirement accounts like 401(k) plans are some of the most precious assets they would ever have. Assets of these sorts are usually passed on to the beneficiaries of the owner. There are forms provided by the employer to access these assets instead of the will created by the owner. Most of the times, young adults like you are ignorant of these provisions and even if some of them are, then those people are found to be least bothered about filling up the necessary forms to safeguard their assets from future catastrophes. Failing to assign a proper beneficiary would actually make it tough for your immediate family members to access and use the legacy that would leave behind in the event of your sudden demise.

• Prenuptial contracts – A lot of has already been said and discussed regarding prenuptial agreements on various websites and textbooks. However, it is worth another mention here, as a lot of you will marry in your 20s or at least meet your life partners eventually. Financial planners encourage young adults to have a proper prenup in place before exchanging marital vows. This is not only to defend their existing wealth, but also the assets they share that could be divided in case of a divorce. The prenup includes gifts from family and friends, business interests, future inheritances, and so on. Though the list could go on and might overwhelm you in the process, yet all the above mentioned documents barring the prenups are most straightforward in nature and affordable. Moreover, there are some selected documents like advance directives that are free. According to the financial experts, the most suitable time to put these essential documents in place is before you need them. On the contrary, it might be too late to get hold of these documents once you actually need them.

This goes without saying that women should plan their finances well in advance as they are more prone to financial dependency over their husbands. Staying prepared for the worst could help you to avert a larger financial crisis and prevent unnecessary monetary hassles at a later stage in life.

What Should You Do With Your Tax Refund?

by Patrice C. Washington

Tired of hearing about what not to do with your tax refund? Here’s a look at 5 smart and actually powerful things you can do with this year’s tax refund. They’ll not only help you get the financial house in order today, but they’ll help you keep on track for the long term!

1. Create an Opportunity Fund – An opportunity fund is nothing more than the typical emergency or rainy day fund you normally hear about, but with a spin. I believe that what you verbalize, you visualize and therefore run a greater chance of magnifying or magnetizing in your life. So, if you’re running around asserting that you need an “emergency fund” then what will happen? You’ll probably have an emergency! Instead, think about the things you really want to accomplish and life and allow that to be your motivation. . . .Will emergencies still arise? Well, duh, of course they will. But, now you have the opportunity to make what would have once been a crisis a simple inconvenience. There is nothing pleasant about an emergency, but knowing that if one came up, you’ve psyched yourself into saving to handle it with ease is definitely a blessing.

Read More

Is Tax Strategy Included in Your Financial Goals?

Without fail, each new year brings heartfelt resolutions for improvement. Did you promise to live healthier this year? Did you vow to spend more quality time with your loved ones? If you were like most people I know, you probably made getting your finances together your mission for 2014. This is a great mission to have. Life is so much easier with an organized, functioning, profitable financial life, right?

Read More

Do You Really Know What Personal Finance Is?

by Patrice C. Washington

If you were embarrassed by that question, don’t be. More people should actually ask and more personal finance “gurus” should stop assuming that everybody knows!

Personal finance deals with your individual relationship with money. It serves as your financial outline; speaking to the way you obtain, budget, save, spend and manage monetary resources overall.  These behaviors are assessed at various stages throughout your lifetime, taking into account a mixture of financial risks, as well as major life events like getting your first job or getting married.

Read More

Is Your Passion Enough?

by Patrice C. Washington

Don’t waste time pursuing a passion you haven’t taken time to perfect. There, I said it! I had to get it off my chest once and for all. In the pop tart, microwave, faster than the speed of light world we live in today, entitlement runs rampant throughout our community.

The days of working hard to achieve a goal have basically been tossed out the window. All we know is it’s ours and we want it now; and not like right now, but like yesterday! Who cares if you are naturally good at something? While you’re somewhere pouting about people not recognizing how “good” you are, there are others out there taking the same skill and making it GREAT!

Read More

Have You Made a Man Your Financial Plan?

by Patrice C. Washington
I can’t believe I’m saying this, but I think reality shows like the Basketball Wives and even the Real Housewives franchises are getting a bad rap. . . Okay, well maybe not a bad rap, but far too much credit in creating what some may call “gold diggers.” I’ve heard several times recently that these shows are teaching young women that the only control they have over their financial destinies is keeping themselves attractive enough to trap, uh I mean, catch a baller. Yes, I’ve even been guilty of blaming 50 Cent for the hook, “Have a baby by me and be a millionaire,” when I speak to high school and college aged women across the country. But truthfully, way before rap artists and cable television, many women were taught in their homes first and foremost that their job, no matter how educated they became, was to find a suitable and stable man whom they could marry and live happily ever after with. Although times have changed, similar “advice” still runs rampant today.