Monday Night Finance- Volume 23

Published
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How much life insurance do I need?

Life insurance is a part of being an adult that nobody ever tells you about. Everyone knows that they “should do something about life insurance” but many people don’t know where to start. As a result, people may not carry life insurance. On the other extreme, people may have been contacted by an over-enthusiastic life insurance salesman who sells them a large policy that they don’t need. If you have been thinking you need to get life insurance but don’t know where to start, this article is for you.

The biggest question is how much life insurance do I need? Unfortunately, there’s no quick or easy answer to that question, at least not if you want a reliable number – because everyone has different needs. ~Ashley at WalletHacks

In this article, Ashley, from Wallet Hacks, gives a detailed breakdown of understanding what life insurance is and how to calculate the proper amount of life insurance to carry. While many people base their life insurance needs off of a rule of thumb (such as 10x income) this can be inaccurate. Instead, it is better to calculate the amount of life insurance you need based upon your current expenses. Are you unsure of what your current monthly expenses are? A budgeting app, such as CountAbout, is the perfect way to track your spending and your net worth. Once you’ve calculated your monthly expenses, you have a good idea about how much money you’d need to provide your family to cover their expenses for a year. By multiplying the yearly expenses by the number of years you wish to provide for your family you can come to a solid determination of the amount of life insurance you should buy. You may also wish to adjust your numbers if you have appreciable debts (or savings), so take your net worth into consideration as well when looking for a policy. For even more tips and tricks check out the article.

Creating the right flexible investment plan to watch your money grow

Similar to life insurance, another aspect of “adulting” is developing a retirement plan. We all hope to retire someday. But retirements don’t just happen. In fact, they require years of saving, investing, and careful planning. On top of that, retirement is just one of many financial goals. Perhaps we’d like to pay for our children’s college educations. Or we’d like to take a year off of work to travel the world. Whatever our financial goals are, they require a plan.

Long term investments depend on the right amount of diversification and discipline from the investor. More important than picking the right stocks or mutual funds, you need to be consistent, organized and disciplined. ~Leblon Blue

In this article, Leblon Blue shares a blueprint for developing your own investment plan. An important first step is setting a specific and measurable goal. For example, maybe you want to be a millionaire in 20 years. Or maybe you want to save 20,000 for an emergency fund in the next 3 years. Once you’ve set your goal, the next step is to calculate how much money you need to save each year. This depends on your expected return, which in turn depends upon your portfolio allocation. The article walks you through different asset classes and expected returns. Finally you need to come up with a plan for saving money. To do this, you need to know how much money you make and how much money you spend. Budgeting tools, like CountAbout, come in handy for helping you find realistic savings goals. Once these parameters are set, you’re well on your way to achieving your goals.

Why we made it and you haven’t, yet.

It seems like every day there is a new article with a click-bait title about young couples who have retired at 30 and traveled the world. How did they achieve these goals? Many times, when you look into the details it appears that the claims, while technically accurate, don’t reflect the whole truth of what is going on. But for every click-bait story, there are numerous other, true stories of people who have retired early. One such couple are Shannon and Sergio from ScrewTheAverage.com. In this article, Shannon explains how they achieved financial independence and how you can work to achieve it too.

We aren’t the type to believe in fate, luck, or dreams. We believe in making things happen, hard work, and goals. Yet we recognize that we’re fortunate to have been born in a first-world country and neither of us have a chronic, debilitating illness. ~Shannon from Screw The Average

Shannon’s article is deeply personal and draws upon her previous life experiences. She progressed from a shy, passive teenager to an adult with a “Millionaire Mindset” where too much success is never enough. She attributes this change in mindset in her 20s as the key to her early retirement success. Shannon also espouses the benefits of stoicism and recommends doing hard things each day. These experiences will help to prepare you for future difficulties. If you want to follow the blueprint of someone who has actually achieved financial independence, check out this article.