I realize that some of my readers are out there looking at me with a quizzical brow wondering why I would choose to write a post that includes estate planning tips when my main demographic is folks under 30. Let me promise you that this information is worth your time.
It can be easy when you are in your teens, twenties and thirties to trick yourself into thinking that you will live forever, but the truth is that you will not. You have no idea what the future holds! While this may be a scary thought, it is not intended to be. In fact, by talking about emergency funds, retirement savings and aspects of estate planning we are actually doing something to control that fear and maybe even find joy in what the future might hold for us and those we love. Here are some tips to help you think ahead:
- Emergency Funds: An emergency fund is money set aside for use in emergencies, generally 3-6 months worth of income. I cannot over stress the importance of building up and maintaining this fund, even if you can only contribute $20/month right now. This fund comes in handy when you have unexpected expenses such as car repairs, home repairs, medical costs or job loss. I recently got hail damage on my car and I couldn’t be more grateful that I could draw money from this fund and not rack up a credit card bill. Check out this post for tips for creating an emergency fund. Even if you can only start small, it is worth it to start saving now.
- Retirement Savings: For many of you, retirement might seem like it is a long ways off. You may have decided to defer saving for retirement until you have a better job, are making more money, have kids, etc. But, you really can’t afford to put it off. By the time that you get around to it, it may be too late. With the magic of compound interest, beginning to save at age 22 versus waiting until you are 35 can make a big difference. Check out this article for tips on why it is important to start saving now. Again, contributing a small amount now towards your retirement can really add up.
- Estate Planning: There are many different aspects to planning for your estate. I will explore a few.
- Will: According to RocketLawyer’s 2011 poll, 60% of Americans admitted that they didn’t have a will. Nearly everyone under 30 that took the pool, 92%, said that they didn’t have a will. If you are over 18, it is not too early for you to be thinking about making a will. Check out this business insider article for more information on why it is important to create a will. What many people do not understand is that if you do not make a will the state will decide how your property will be distributed. While you may think that you do not have “property” because you may not own a home yet or have children, you probably have a bank account, savings account, jewelry, car or even some investments. Your will is also a great time to think about charitable causes that you might want to leave money or property to in your estate. A will ensures that your assets are distributed to those you choose in the manner that you choose. You can create a will with a lawyer or online for under $100. If you decide to do this online, be sure to do your research.
- Living Will: While you are thinking about your estate, it is also important to create a living will, also known as a health care directive or physician’s directive. This document informs your family and health care providers about your desires for prolonging medical treatment in the event that you are not able to speak for yourself. The regulations for this vary by state, so it is good to have a lawyer assist you with this. Many estate planning lawyers will include living wills and durable power of attorney in your package of estate planning documents. You may also be able to fill out this form online, be sure to thoroughly research the site before you use it. For more information on living wills check out this all law article.
- Durable Power of Attorney: While you are working on those other two estate planning documents, you will probably want to also create a durable power of attorney. This is a legal document that gives someone the power to act in your place if you become incapacitated, particularly in matters financial and medical.
I realize that this information can be really overwhelming and somewhat depressing. But, it is incredibly important! While we can never have complete control over our future, by saving money and planning our estate we can know that our wishes will be respected and our future will be more secure.
Join the Conversation: How are you thinking ahead and preparing for your future?