Archives September 2020

Since when it was first introduced in 1997 as an insurance product by Transamerica, much has been said about Indexed Universal Life Insurance (IUL), but very few people know this product. And the ones who knew this product don’t understand how it works. This product has been the fastest-growing permanent life insurance product in the industry for the past 23 years.

Indexed Universal life insurance is a type of universal life insurance where rather than your cash value growth based on a fixed interest rate, it’s tied to the performance of the index market like Global Index and S&P 500. You can access this cash value at any time during the length of the policy on a tax-deferred and tax-favored basis.

Unlike other insurance products, you won’t lose money when the market has a downturn. It is because there’s a guarantee applied to your principal, insuring it against losses or market downturn. There’s also a cap, which is the maximum rate used to determine how much excess index interest that an Insurance Company will credit your index account.

Asset Accumulation, Protection, And Flexibility.

Let’s look at a more detailed description of Indexed Universal Life Insurance;

1. A form of permanent life insurance policy that is designed to last your entire life, eliminating the uncertainty of not knowing when you will die and whether your family is financially protected at the time of your death.

2. Includes a savings component designed to accumulate assets in a tax-efficient manner, which can be used for retirement supplementation, education funding, wedding expenses, or any other way you want.

3. The term “Index” signifies that the savings component earns interest that is indirectly tied to the performance of a stock index. This potentially allows for a higher rate of return than traditional fixed rates, which allow assets to grow more rapidly and provides a hedge against inflation.

4. The term “Universal” stands for flexibility. You get to determine, within certain guidelines how much premium to pay, how often to pay a premium, to skip premium altogether, how your assets are invested, when to take money out, how death benefits are paid and in some cases, you can even change the amount of insurance coverage.

When this product is structure properly as an accumulation vehicle, you would want to pay the maximum premium possible while keeping the death benefit to a minimum. This is the key to keeping your policy expenses to a minimum and therefore more premium to be available for your equity-indexed universal life insurance to accumulate.

This post contains affiliate links. Please please read my Disclaimer for more information.

Premium And Flexibility Of (IUL).

The difference between IUL and other permanent life insurance policies is the way interest is credited to the policy. In addition to offering a traditionally declared interest rate, IUL also offers the ability to earn interest that is linked to the movement of a selected stock market index over a specific period of time, usually, 1 year but some policies offer 2 and 5 years periods. Even if the index goes down, your credited interest rate will never be negative, and it is guaranteed. So your worst-case return for a year could be 0%. or 0.75% depending on which insurance company.

 Flexible premium- You can pay more for one month or less the next. Sometimes when you face money problems, you can even skip a few payments as long as the cash value inside the policy is enough to pay for the cost of insurance (COI).
You can adjust your death benefit to fit with life-changing conditions. The interest on the cash value may also be sensitive to market conditions. That allows insurance companies to adjust the interest rate to give higher or lower rates if necessary.

Death Benefit Protection.

1. Permanent Life Insurance (Up to age 121) – If your goal is to protect your family with the flexibility to adapt as life changes, IUL Protect may be the right choice for you. With Index Universal Life Insurance Policy, you get clarity with simple, guaranteed protection so you can live more today, keep more of the money you earn, and gain the potential to build more cash value that you can use it while you are still alive as living benefits.

2. Living Benefits ( Long-Term Care, Chronic, Critical and Terminal illness).

The second form of protection that IUL provides is a relatively new feature in the industry called Living Benefits. Living Benefits are benefits that you don’t have to die to use. Interestingly, this protection benefits you while you are still living rather than only being a benefit that your beneficiaries receive upon your death.

Specifically, you may have options for chronic, critical, and terminal illness and long-term care which you can receive part of your death benefit tax-free while you are living to help pay for medical bills, time off work, or any other reason. Not all companies offer these benefits and, for those companies that do, there is little uniformity of how the benefits are offered and administered. Generally, these additional benefits are offered by the voluntary option of adding insurance riders to your policy.

Cash Value Account (Savings).

1. Interest – Interest is credited to the policy’s index account value is based on the performance of the index chosen and will never be less than zero percent.

2. Liquidity – when you take a withdrawal from your policy, you will permanently reduce the face amount of your policy. The withdrawal will generally be income-tax-free up to the number of premiums that you have paid into the policy. You may also face surrender charges on the amount that you withdraw.
On the other hand, taking loans can be a huge advantage to accessing your cash value and they don’t even need to be repaid. Loans are also not taxable. Just like taking a home equity loan against your home – those loans are not taxable. Now there are generally 2 types of loans. Standard and variable loans. The most commonly used loan in an IUL is the variable loan.

3.Tax Advantage – The tax advantages of insurance are only good if you have gained and a significant accumulation of money. If you have term life insurance, all these tax-free loans, tax-free withdrawals, and tax-deferred earnings are of no use because the Term policy has no cash value account. For those with Permanent Life, if you have little money in it, it also makes little difference.

4. Creditor Protected – This feature will depend on your state. Many states will not allow creditors to come after the money in a life insurance contract.

Why Are Many People Not Buying This Product?

In reality, many policy owners either don’t understand the advantages of Indexed Universal Life Insurance and they don’t have the money to contribute enough to capitalize on the tax advantages. Also, in the past, traditional policies with low-interest rates did not help to accumulate high cash values, so these advantages were not so beneficial.

With the recent introduction of different saving and investment choices, more people can get better cash accumulation and make great use of these tax advantages. Considering the amount of taxes people pay, people must understand and look for financial vehicles whether, in insurance or investment, that can save their future build-up and retirement supplementary income.

“If you have any feedback about how to index universal life insurance works that you have tried out or any questions about the ones that I have recommended, please leave your comments below!”

NB: The purpose of this website is to provide a general understanding of personal finance, basic financial concepts, and information. It’s not intended to advise on tax, insurance, investment, or any product and service. Since each of us has our own unique situation, you should have all the appropriate information to understand and make the right decision to fit with your needs and your financial goals. I hope that you will succeed in building your financial future.

* Saving Your Future ( www.worldsystembuilder.com).

It was Benjamin Franklin who said that nothing is certain in this world except for death and taxes. Americans are tax in four different ways when you make money, they tax you, you spend money, they tax you, you save money, they tax you, and when you die, they tax you. From sales tax to income tax to property tax to estate tax and every other tax, anywhere you turn, the IRS is waiting for your hard-earned money.

If there were strategies where you can legally reduce or avoid paying taxes during your retirement years. Is that something you would like to know more about, and if possible try to implement them in your retirement planning?

A Growing Tax Problem In The United States.

Taxes take a big chunk of your money as an active worker and also during your retirement if you don’t understand or use tax-free retirement strategies. Any saving and investment strategy must consider the tax impact on it. What is your current tax rate? What will the tax rate be in the future? Will taxes rise and fall during your retirement years?

We now know that with the COVID-19 and the recent economic crisis, millions of Americans are in danger of not having enough money to maintain their standard of living in retirement years. The consequences of these growing economic and savings crises could be severe for both American families and the national economy. Let’s look at the challenges ahead.

This post contains affiliate links. Please please read my Disclaimer for more information.

1. The Shrinking Tax Base – Between 1945 and 1965, when Social Security began, the decline in worker-to-beneficiary ratios went from 41 to 4 workers per beneficiary. And the number continues to decline due to the aging demographics in the United States.

The Social Security program matured in the 1960s, when Americans were consistently having fewer children, living longer, and earning wages at a slower rate than the rate of growth in the number of retirees. As these trends have continued, today there are just 2.9 workers per retiree, and this amount is expected to drop to two workers per retiree by 2030.

The program was stable when there were more than 3 workers per beneficiary. However, future projections indicate that the ratio will continue to fall from two workers to one, at which point the program in its current structure becomes financially unsustainable.

2. Mounting Debt Crises – As of August 31, 2020, federal debt held by the public was $20.83 trillion and intergovernmental holdings were $5.88 trillion, for a total national debt of $26.70 trillion. Guess who is going to pay for this debt? Our future generations. The government borrows most of it through public debt, which it owes to individuals, businesses, and foreign governments who bought Treasury bills, notes, and bonds. Foreign investors hold the largest share of the U.S. national debt. China and Japan top the list, holding more than $1 trillion each in IOUs.

As the tax base for workers per retiree is shrinking, the costs to provide retirement benefits, Medicare, defense, and infrastructure continue to rise. The government will have to choose between cutting down the budget or raising taxes. Many people believe taxes may have to go up in the future. What do you think? That’s why many Americans are looking for strategies to reduce or avoid taxes during their retirement years.

Tax Free Or Tax Advantage Retirement Vehicles.

These are legal tax-free or tax advantage retirement income financial vehicles;

1. Health Savings Account ( HSA) – This is a savings account used in conjunction with a high-deductible health insurance policy that allows users to save money tax-free against medical expenses.

2. Roth IRA – It’s an individual retirement account allowing a person to set aside after-tax income up to a specific amount each year. Both earnings on the account and withdrawals after age 591/2 are tax-free.

3. Roth 401(k)- It’s a type of retirement savings plan. It was authorized by the United States Congress under the Internal Revenue Code, section 402A, and represents a unique combination of features of the Roth IRA and a traditional 401(k) plan.

4. Roth 403(b)- It’s essentially a hybrid combining some features of a traditional 403(b) plan with some features of a Roth IRA. Roth IRA plans are self-established without any employer involvement.

5. Cash Value Life Insurance- It’s a form of permanent life insurance that features a cash value savings component. The policyholder can use the cash value for many purposes, such as a source of loans or cash or to pay policy premiums.

Indexed Universal Life Insurance (IUL 7702A).

It is important that all individuals understand that, by definition, a life insurance policy is a tax-deferred vehicle. It is not a tax-free vehicle. In other words, the cash value within a Universal Life Policy grows without being taxed, but if this money is simply withdrawn, then all the gains realized within the policy (the amount above the total premiums paid) will be taxed and taxed as income, not capital gains.

Let’s look at how Indexed Universal Life Insurance can help us retire tax advantage or tax-free. Let’s say you are going to borrow money to buy a new house or car. Is the loan you receive from the bank being taxed? No. The house or car may be taxed ( due to state sales tax), but the loan is not taxed. Right?

Loans are not taxed; items are not taxed. So Life insurance companies, in their brilliant ingenuity, created a contractual policy feature that allows the policy owner to have access to tax-free money by using their life insurance cash value as collateral. This feature enables the owner to avoid any tax on the money received because it is just a loan from a financial institution, not a withdrawal.

A policy owner can always take a tax-free withdrawal up to the total premiums paid into the policy, subject to surrender charges because the first money allowed coming out of a life insurance policy is simply a return of the owner’s total premium payments, which have already been taxed prior to being put into the policy.

However, if an individual wants to withdraw money above the total amount of premiums paid ( again, always subject to any surrender charges) then a withdrawal of this gain would be taxed. It would be taxed as income because the policy owner would now be withdrawing money that has not yet been taxed.

How To Access Tax-Free Money During Retirement.

For you to benefit from Indexed Universal Life Insurance as a tax-free retirement financial vehicle, the policy must stay in force until the insured’s death. The reason that policy must stay in force is that if the lapse or cancels for any reason, then all of the gains that have been taken as a tax-free loan will suddenly become taxable. You should sit down with your financial adviser should you want to include any of these products in your tax-free retirement planning.

Why Isn’t Everyone Using This Tax-Free Retirement Vehicle?

Many Americans aren’t using this Indexed Universal Life Insurance strategy for tax-free retirement income because they don’t know about it. And secondly because though this financial product is open to everybody who can qualify for and needs life insurance, it is often best suited for those who earn a relatively large income or for individuals who want to save more each year than what Roth IRA will allow.

During our retirement years, most retirees don’t have the monthly income to take of their living expenses and they would like to reduce or avoid paying too many taxes. If you would like to pay fewer taxes during your retirement years and have much money to spend on other living expenses and medical expenses, then please talk to your financial adviser to take a look at Indexed Universal Life Insurance as a tax-free or tax advantage financial vehicle.

“If you have any feedback about how to retire tax-free that you have tried out or any questions about the ones that I have recommended, please leave your comments below!”

NB: The purpose of this website is to provide a general understanding of personal finance, basic financial concepts, and information. It’s not intended to advise on tax, insurance, investment, or any product and service. Since each of us has our own unique situation, you should have all the appropriate information to understand and make the right decision to fit with your needs and your financial goals. I hope that you will succeed in building your financial future.

If you ever thought that getting out of debt with a low income was difficult, wait until you try to get out of debt with a low income during this period of the COVID-19 pandemic!

We all know that the COVID-19 pandemic has triggered an unprecedented wave of business closures, placing millions of Americans out of work. It has also exposed a deeper, more structural problem with the United States economy that has been looming just beneath the surface for some time. In the following paragraphs, we will learn more about how to get out of debt with a low income during this difficult period.

Understanding Debt And How To Live Without Debt.

It’s often believed that debt can be used as leverage and that it can get you where you want to go faster than living a debt-free life. That can be true, but living with debt can also get you bankrupt faster than living a debt-free life. Debt has become a way of life in the United States.
Many Americans are now living from paycheck to paycheck as result, a lot of people are also in debt and some are still borrowing more money. Ironically, we live in one of the wealthiest countries in the world, but we always have money problems. We can work hard all our lives but retire poor. We do so much to raise our kids just to see them finish college with a lot of debt.

Debt becomes a way of life. We don’t have much, and we don’t know much. Nobody teaches us how to manage our money in school. Financial issues are not often discussed, and financial products are not always explained. Most people have trouble balancing their checkbooks and reading a financial statement. We use credit cards every day and don’t always understand all the hidden charges. We may be active spenders but passive savers. In my videos, I want to share with you about personal finance as to how a friend would talk to another friend.

This post contains affiliate links. Please please read my Disclaimer for more information.

Debt Management is one of the four pillars of building a solid financial foundation or living a life of financial freedom. We can not live a life of financial freedom if we owe a lot of debt. Most interest rates on our debts are higher than the interest rates on our saving or investment accounts. That’s why it’s advisable to pay off your first before saving and investing.

Don’t Get More Debt when you have a low income.

I know a lot of people might be wondering is it possible, yes it is very possible to live without debt. You can pay it all off and stop borrowing money. Some people get more debt when they have a low income because they spend more money on things they don’t need with money they don’t have.

What Is The True Cost Of Debt?

You’re paying lots of interest to someone else.
This money is not working for you. Here’s is why you need to know the cost of debt;

Rule of 72.

How to use the Rule of 72? Divide 72 by the interest rate of your loan or credit card. The result is the number of years it takes for the debt or investment to double. Let’s take a look at the following interest rates; 18%, 20%, and 24%.

72/18 = 4                              72/20 = 3.6                                 72/24 = 3

Assuming that you have a $10,000 credit card debt, let’s see how long will it take before the borrowed amount doubles!

At 18% interest rate, it will take 4 years for your borrowed amount to double to $20,000.
At 20% interest rate, it will take 31/2 years for your borrowed amount to double to $20,000.
At 24% interest rate, it will take 3 years for your borrowed amount to double to $20,000. This is why it’s good to pay your debt as fast as possible to avoid the double effect.

This is why it’s good to pay your debt as fast as possible to avoid the double effect. Here are the simple ways to manage your debt;

1. Don’t Get More Debt – If you borrow more money, the interest will skyrocket over time which you will not be able to pay.

Always buy used items from thrift stores and classifieds when you need to buy anything, including clothes, furniture, vehicles, and even appliances.

2. Live Below Your Means – Spend less and only buy things with your own money instead of credit.

Make a grocery shopping list as per your budget. Let’s assume you have allocated a certain amount for grocery shopping, then you shouldn’t spend more than this amount. You can buy groceries online to get all the items on your list at a huge discount. This will help you save on grocery shopping. Always use cash, debit cards, and prepared credit cards when shopping for groceries because you don’t have to pay interest rates. You are using your own money.

3. Reduce Your Credit Cards Usage – Many middle-class Americans turn to use their credit cards as a plastic money savior to help purchase necessary items when they have a lot of debt and low income.

4. Make a Budget – Budgeting helps you manage your spending and also helps manage your debt. Use coupons for grocery shopping and for dining out. Reduce gas and parking costs. Save by carpooling, walking, biking, or taking public transport. Avoid ATM fees, checking and saving accounts fees, overdraft charges bounced checks, money orders, the list goes on.

5. Cancel Any Unnecessary Subscriptions – Recurring payments can add up, even if you don’t have any unnecessary expenses. During COVID-19, my family canceled our gym membership because we not going to the gym, so we find alternative ways of exercising like using home gym pieces of equipment.     

Use Debt Snowball Method.

With the debt snowball method, you always put your extra money toward the debt with the smallest balance.

Here’s an example – Assuming that you have a credit card with a $1,000 balance, another with a $3,000 balance, and a third with a $7,500 balance. You make the minimum payments on each card, and any money left over would go toward the card with the $1,000 balance. Once you pay off that card with $1,000 you would put your extra money toward the card with the $3,000 balance.

Mathematically, the debt snowball method isn’t optimal. You would also save more money on interest rates by prioritizing debts with the highest interest rates on credit cards or loans.
Using this method is extremely popular because it works from a psychological perspective. When you prioritize your smallest debt, you get one of your debts eliminated as quickly as possible. That gives you the motivation that you can take care of the rest and be on your way to live a debt-free life.

Take Control Of Your Cash Flow.

Get educated about all aspects of personal finance to take control of your cash flow and reduce or eliminate your debt with a low income. You also have to make money when you can, while you can. If you have multiple sources of income, paying your debt with a low income during this period of the COVID-19 pandemic won’t be a problem.

We spend so many years in school learning how to make a living, but we should also invest our time learning the financial basics to save a fortune for our family and our future! If you don’t re-evaluate your spending habits and determine where your money is going, you will never be able to pay off your debt with a low income during this pandemic.

“If you have any feedback about how to get out of debt with low income that you have tried out or any questions about the ones that I have recommended, please leave your comments below!”

NB: The purpose of this website is to provide a general understanding of personal finance, basic financial concepts, and information. It’s not intended to advise on tax, insurance, investment, or any product and service. Since each of us has our own unique situation, you should have all the appropriate information to understand and make the right decision to fit with your needs and your financial goals. I hope that you will succeed in building your financial future.

It’s ironic that we live in one of the wealthiest countries in the world, but we always have money problems because of the lack of a solid financial foundation. We can work hard all our lives but retire poor. We do so much to raise our kids just to see them finish college with a lot of debt. Debt becomes a way of life.

We all know that the COVID-19 pandemic has triggered an unprecedented wave of business closures, placing millions of Americans out of work. It has also exposed a deeper, more structural problem with the United States economy that has been looming just beneath the surface for some time. Many Americans are living hand-to-mouth and have almost no savings.

Why Should You Build A Solid Financial Foundation?

According to a recent survey from America Debt Statistics, almost half of the families in the United States live paycheck to paycheck. 19 percent of Americans have zero dollars set aside for an emergency. Two out of ten Americans use at least 50% of their income to pay back what they owe. 13% of Americans expected to be in debt for the rest of their lives.

The cost of raising a child in Americans around $250,000 from birth to age 18. Medical costs have increased by 33% in the past 30 years, while income has only grown by 30%. The average consumer debt is $38,000 excluding mortgages. The average American household mortgage is $189,586. Mortgage debt is the biggest debt in America – with $9.44 trillion owed collectively and 80% of Americans have consumer debt.

We don’t have much, and we don’t know much. Nobody teaches us how to manage our money in schools. Financial issues are not often discussed, and financial products are not always explained. Most people have trouble balancing their own checkbook and reading a financial statement. We use credit cards every day and don’t always understand all the hidden charges.

We buy insurance policies and stick them in a file cabinet. We contribute to our 401k or 403b and hope someone will take care of it. We all want to have a comfortable retirement, but few have a plan. We may be active spenders but passive savers. Building a solid financial foundation will help us reduce or eliminate some of the above-mentioned problems and live a life of financial freedom.

This post contains affiliate links. Please please read my Disclaimer for more information.

Four Pillars Of Building A Solid Financial Foundation.

Many Americans want to build a solid financial foundation or live a life of financial freedom, but few of them don’t know how to do it. Like building a house we must start to build it from the ground up. Here are the four pillars of building a solid financial foundation;

1. Protection – You should have the proper protection in the event of disability, health problems, or premature death. People must prepare in case they die too soon and also if they live too long.

2. Debt Management – You should reduce your liability and get out of debt.

3. Emergency Fund – You should set aside 3 to 6 months of your income to deal with sudden changes in your job or business or to pay for unforeseen accidents or repairs.

4. Investment – You should save and invest for the long run or your future.

A strong financial foundation will build a sturdier, more enduring financial house. Otherwise, it won’t remain standing when the storms, tornadoes, and earthquakes strike. Thus, the 4 financial foundation layers will build a solid ground for your financial future.                              

Understanding How Money Works.

Wealthy people tend to spend time learning and understanding how money works. They look for advice and solutions to get better returns for their money. A lot of poor people lack knowledge about personal finance. Some don’t care to understand. Many have no plan and little savings. What savings they have are usually put into accounts with a low rate of return. Their money doesn’t work for them.

Compounding interest works both ways. It can make you, and it can break you. If you owe money, the compound interest on your debt can ruin you. As a result, many people keep paying the bill with high interest. Despite numerous payments, the balance of the bill barely goes down because high interest on the balance continues to compound. Sometimes, it feels as if it’s impossible to pay the balance off.

The Power Of Compounding Interest And The Rule Of 72.

The Rule of 72 is a simplified way to estimate the doubling of an investment’s value, based on a logarithmic formula.

The Rule of 72 can be applied to investments, inflation, or anything that grows, such as GDP or population.

The formula is useful for understanding the effect of compound interest. Here’s how the rule of 72 works:

Assuming that you saving $10,000, At 1% rate of return, it takes 72 years for $10 to turn into $20,000.

At 4% rate of return, it takes 18 years for money to double. It’s a simple formula. Now, instead of your money doubling once over your lifetime, you could experience two or multiple doubles depending on your rate of return.

At 8% rate of return, it takes half the time, 9 years for money to double. What if your money doubled four or five times in your life? Let’s look at the rule of 72 this way. At 29 years old, if you had $10,000 earning a 4% rate of return, your money would double in 18 years. You would have $20,000 at age 47.

If you earned 8% rate of return, your money would double in only 9 years. At age 38 you would have $20,000. Let’s double it one more time in 9 more years you would have $40,000 at age 47 and one more 9 years $80,000 at age 56. Now you can see the power of the rule of 72 and compounding interest. The more rate of return you earn your money doubles faster.

If you earned 6% on a $10,000 investment, after 36 years, you’ll have $80,000. That’s three doubles in your working lifetime.

If you double your return from 6% to 12% you double every 6 years. Your money could double 7 times in your lifetime. At age 65 you will have $640,000.

The difference between $10,000 at 4% versus 12% is $600,000. $600,000 is equal to 20 years salary of someone who earns $30,000 annually. The Rule of 72 unveils the powerful impact of compounding interest on money. It also reveals 2 types of people. People who don’t understand how money works- end up working for money. And people who understand how money works-they let money work for them.

Be Your Own Money Manager And Control Your Future.

You won’t be free until you are financially free. You can be free from the burden of debt, just start with a simply written budget. Look at your bank accounts, add it all up and see where your money is going. Look at the reality of your situation, and don’t be afraid to make changes. Financial concepts and solutions may not be the most exciting subject, but with discipline and patience, you can learn and understand the fundamentals. And you can build a good financial foundation. Financial independence is not a dream. It is a priority. Take control of your future.

“If you have any feedback about how to build a solid financial foundation that you have tried out or any questions about the ones that I have recommended, please leave your comments below!”

NB: The purpose of this website is to provide a general understanding of personal finance, basic financial concepts, and information. It’s not intended to advise on tax, insurance, investment, or any product and service. Since each of us has our own unique situation, you should have all the appropriate information to understand and make the right decision to fit with your needs and your financial goals. I hope that you will succeed in building your financial future.

According to a brand new survey from Bankrate.com, just 37% of Americans have enough savings to pay for a $500 or $1,000 emergency. And a growing percentage of Americans have no emergency savings whatsoever!

An emergency fund is a financial safety net for future mishaps and unexpected expenses. We need an emergency fund to help us take care of unforeseen circumstances like a health emergency, disability, or job loss, and so on so that they can lead to a lack of revenue.

How Can You Build Your Emergency Fund?

Most financial advisors recommend that we need to save some money aside in a liquid account for the rainy days. And that you can start by saving three to six months of monthly payments for an emergency fund which you can easily access should you have an unforeseen circumstance.

I know you might be wondering how and where can I start saving my emergency fund! Here are a few ideas to help you start building your emergency fund on a daily, weekly, and monthly basis. It’s always a good idea to set a goal and then you can come up with the amount that you want to save regularly later.

1. Look For Easy Places To Cut Or Manage Your Expenses – Make sure you understand the concept of needs and wants and apply it to your spending habits. An emergency fund is one of the pillars of building a financial foundation for our families and our future. Our priority would be to spend more on needs and spend less on wants.

2. Set A Timetable For Your Emergency Fund Savings – The goal is to have at least three to six months of your monthly payments, but you can break it down by setting your saving target and then the amount every week or month. Expect that it will take a while to build a large emergency fund savings, but it starts with you being disciplined and consistent.

3. Open A Separate Account For Emergency Fund – It’s often said the first step is always the hardest. If you combined your emergency fund with your regular savings account, you will be tempted to spend it. It’s advisable to open a separate liquid account where you can easily withdraw money during an emergency situation.

4. Automate Your Emergency Fund Savings – In order to ensure that you really stick to your timetable and build your emergency fund, set up a direct deposit so that a set amount of money from your paycheck is sent directly into your emergency fund account by-weekly or every month. That way, you don’t have to remember to move it yourself each time.

5. You Can Save Your Tax Refund And Company Bonus – Many Americans use their company bonus every year to purchase a lot of liabilities instead of assets. Saving your tax refund is an easy way to boost your emergency fund. During tax season we have the option to have our refund deposited directly into your emergency account.

This post contains affiliate links. Please please read my Disclaimer for more information.

You Don’t Have To Borrow Money Or Use Your Credit Card For Emergency Fund.

Many Americans borrow money or use their credit cards for emergency funds. If you don’t have money in an emergency fund account when disaster strikes, you’ll need to come up with some funds to take care of emergency circumstances.

This could mean selling some of your assets at a loss during times of economic trouble or loss of a job. Not having an emergency fund can force you to accept high-interest rate loans for car repairs or house renovation. Putting a certain percentage of your pay in a liquid account consistently will help you avoid the above-mentioned situation.

How Much Should I Save For Emergency Fund?

There’s no perfect amount for you to save for emergency funds, but banks and financial advisors recommend that three to six months your monthly payments or monthly expenses are the best goal when you start and you can increase it when your income or cash flow increases.

Remember that every family’s financial situation is not the same, so the right amount will depend on your family’s financial circumstances. Let’s assume you lose your job, for instance, you could use the money to pay for necessities while looking for a new job, or your emergency funds could supplement your unemployment benefits.

Why Do I Need An Emergency Fund?

Emergency funds create a financial buffer that can keep you afloat in a time of need without having to rely on credit cards or take out high-interest loans for expensive home repairs.

It should be used during periods of unemployment, medical emergencies, paying for home repairs due to natural disasters, emergency veterinarian bills, and unforeseen vehicle repairs. Without cash on hand to cover unexpected bills, families often end up opting for costly strategies, such as running up credit card balances.

Unexpected Events Can Occur At Any Time.

With the total death toll from coronavirus in the United States now at over one hundred and ninety- two thousand at the time of my writing and with tens of millions of Americans unemployed, it’s no surprise that many people are facing shortfalls when it comes to purchasing food and necessities for their families during the coronavirus pandemic period.

It’s time to act now and take the advice of banks and financial advisors and start saving money for an emergency fund because every family needs to have it now. We don’t know for sure how long this pandemic is going last or when the next one might come, but if we are better informed and prepared, then we will not face the economic devastation that we are seeing today in our country.

“If you have any feedback about the significance of having an emergency fund that you have tried out or any questions about the ones that I have recommended, please leave your comments below!”

NB: The purpose of this website is to provide a general understanding of personal finance, basic financial concepts, and information. It’s not intended to advise on tax, insurance, investment, or any product and service. Since each of us has our own unique situation, you should have all the appropriate information to understand and make the right decision to fit with your needs and your financial goals. I hope that you will succeed in building your financial future.

When getting ready for retirement, the best people wish to be sure they have the cash to shuttle and revel in life. However, while that’s essential, indulging your hobbies and pleasant your desires is never the most effective thing you should worry about doing together with your retirement backup egg.

In reality, some of your largest charges may additionally turn upright through the hardest years of retirement, and they may additionally no longer be non-compulsory.

What Are The Toughest Retirement Years?

For many individuals, they are the years wherein they commence to journey serious fitness issues. Unfortunately, a new analysis from Edward Jones revealed earlier Americans live an average of years in bad health.

This decade of your lifestyle is probably going to be not just bodily complex, but additionally financially difficult as well. It’s because should you launch to journey health concerns, your consumption of clinical capabilities often raises. You may also accept greater doctor visits, medical institution stays, and decree medication to pay for. And opposite to customary perception, these charges don’t seem to be totally lined by Medicare.

Basically, you should expect co-pays, deductibles, premiums, and out-of-pocket expenses, you may be taking a look at spending six figures on medical functions during the common retirement. It’s always good to plan early for retirement when we have the means.

What Are The Challenges That We Face As We Age?

As if that accomplishment is rarely horrifying adequate, these complicated years commonly make it unimaginable to continue to reside independently. As many as 70% of older Americans require some type of careful affliction, either in a nursing domestic atmosphere or from home healthcare aids, during the route of their retirement.

The prices linked to this can also be astronomical, topping hundreds of dollars a year in some instances. If you journey a typical year of poor fitness and need nursing home care for the majority of that point, the price tag might come close to thousands of dollars none of which is lined through Medicare, in most circumstances. Some people shop for retirement planning financial products while they were still young and actively working in order to have a comfortable stress free retirement.

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Healthy Life Style Is Beneficial To Our Retirement Years.

Unluckily, if you happen to journey serious fitness issues, you frequently can not effectively select no longer to pay for the clinical care you want — discovering a means to cowl these costs is simple. And activity back to work is essentially certainly not a choice, each on account of your serious fitness considerations and because of the truth they are likely to come up after on your lifestyles afterward, you could have been out of the personnel for a long time.

Our health is the greatest wealth we will ever have. Without our health, our vitality, our best energy, every part of our lives has the opportunity to suffer. When we are young we spend so much time worrying about our careers and money, but we should also spend much time taking care of our health and plan for our retirement.

How Can We Prevent Some Of These Retirement Challenges?

Health is an investment and could be considered as an investment that might affect our retirement. When we are young, we can’t just rely on short-term healthy diets, the number on the scale, good night sleep, a one-week or a two-week vacation, or a day off from work to create a longer, healthier life.

Most Americans don’t think about healthy living while they are young but rather focused on their careers and money. If you are certainly one of them, you could find yourself in acute straits right through a decade of negative fitness as you be concerned about both your clinical considerations and your economic ones when you approach your retirement years. In case you don’t wish to agonize about cash at the same time that your fitness is failing, it would be essential to planning for these difficult retirement years.

In case you haven’t yet larboard the team of workers, which you can try this through because of the seeming charge of medical services back environment retirement reductions desires. If you are eligible to put money into a fitness rate reductions anecdote, accomplishing so can also support you construct a backup-egg appropriate for your approaching scientific needs towards your personal retirement health goals.

How To Adjust To Retirement Life Style.

When you are already retired and never yet in poor fitness, that you would be able to additionally seize steps now to make sure you are in a position if this destiny befalls you sooner or later. Make sure to keep a secure abandonment price so that you will have discount rates to assist you late in your lifestyle. Get standard medical care to try to stay as suit as which you could as long as possible, and explore your assurance alternate options carefully all over Medicare start acceptance to get the appropriate coverage.

Demography these accomplishments may also no longer seem to be enjoyable, and you can achieve that you just grow to be with beneath years when your fitness is poor, but for the reason that a decade of physical difficulties is normal, you superior be prepared for it.

When And How We Should Prepare For Retirement.

I think getting prepared for retirement also depends on when you start planning for it. When preparing for retirement, most people want to make sure they have the money to travel and enjoy life. While that’s important, indulging your hobbies and fulfilling your dreams isn’t the only thing you need to worry about doing with your retirement nest egg. I think thinking in advance and acting on those thoughts is key to being ready when the future becomes the present. The younger you are, the more distant your retirement and the greater your ability to compound your returns over time. The window of time is your greatest advantage. That being said, retirement shouldn’t be the worst period of our lives especially when you have a solid retirement plan.

“If you have any feedback about how prepared are you for retirement? – we will find out that you have tried out or any questions about the ones that I have recommended, please leave your comments below!”

NB: The purpose of this website is to provide a general understanding of personal finance, basic financial concepts, and information. It’s not intended to advise on tax, insurance, investment, or any product and service. Since each of us has our own unique situation, you should have all the appropriate information to understand and make the right decision to fit with your needs and your financial goals. I hope that you will succeed in building your financial future.