So you’ve set up and funded your emergency savings account. So you’re saving a respectable amount consistently for retirement, so you’re making good money and have a couple of passive income streams to go along with it. So you’ve controlled your spending a bit and found ways to save around the home and in your life. So what’s next?
Believe it or not, there are next-level things you can do to continue to optimize your finances and use your finances to feel good about yourself.
Maintain Long-Term Insurance
No one can predict the future. The reality is anything can happen and it may not be in our control. What is in our control is the ability to plan and protect ourselves from potential ruin.
A good way to plan for an emergency is to have insurance. If something was to happen and you are unable to put effort to earn an income long-term insurance would need to be used. Of if you needed to provide help to a loved one, long-term insurance can help to avoid very expensive costs of care. The national average for long-term care could range roughly from anywhere between $3,600 to $7,700 per month.
These insurance vehicles allow you to take care of large and often medical-related expenses without the stress of figuring out how to pay.
It’s a sad topic to think and plan, but it’s a reality. Still, you can plan for your individual situation. For example, if you have family that is ready and willing to take care of you, a policy with limited benefits may make more sense. According to Kiplinger, a married couple in the 60-65 age range could pay $1,500 per month to cover 75 hours of home care or about 2.5 hours per day.
The plus side is the premiums that you pay on long-term insurance are tax deductible.
Establish A Custodial IRA
If you have kids, you want to do everything you can to make their lives easier. You want to give to them what you may not have had growing up. It’s only natural. A custodial IRA can help with that.
A custodial IRA is an account you open for your child. The child must be earning income for you to open this type of an account. Also unlike regular IRA limits of $5,500, you can’t contribute to a custodial IRA more than income earned by the child. For example, if the child earned $3,000, that is the maximum that can be contributed to the custodial IRA.
You can open up a custodial IRA with a number of brokerages. It’s controlled by an adult, but the name on the account is of the child.
Let’s assume you made only one contribution of $5,500 to a custodial IRA when your child is 15 years old. At a 7% interest rate over 50 years or until the age of 65, that $5,000 can turn into just over $162,000!
Everyone has a cause that they believe in strongly. It may be cancer, world hunger, poverty, ALS, or children with disabilities. It can even be within your place of worship or your local community. The point is there is no shortage of causes, only shortage of givers.
I strongly believe that donating to worthy causes helps us excel more in personal finance and in life.
By donating and helping others, we bring meaning to our lives, motivate and encourage others to help, and of course may be able to receive a tax deduction. Believe it or not, it can help our finances too. We can work hard to earn more so that our donations continue and prosper.
And remember no amount is small. Don’t think to yourself I wish I could donate or I want to wait and give a significant sum. What’s significant to some may not be to others and vice versa.
You can set up a payment plan to donate to a worthy cause like I have to a couple of different organizations. For one, it comes out of my paycheck and is pretax.
This is not about giving you a guilt trip; it’s about understanding that giving truly does make a difference in the lives of others and will bring you joy. Seriously, your brain may experience pleasure.
Set Greater Goals
Earn more, increase your investing, and find new ways to increase savings.
If your work allows for overtime, take on more projects, more hours and ultimately more in your paycheck. Don’t allow yourself to become too comfortable or in reliance of your schedule/routine.
If your work doesn’t allow for overtime, find some spare time for side-jobs like tutoring, writing, or even taking surveys.
After you receive an increase in your income, simply ignore it and put it away in investments or your retirement account. Remember that depending on when you plan to retire, the boost can continue to grow with the help of compound interest.
I came across an article on Rockstar Finance that had great money saving challenges that actually work. I myself will go ahead and try a couple of these.
One of the items in the 30-day monthly challenge is to go grocery shopping on a full stomach so you buy less food.
From a psychological standpoint, we think we need more when we’re hungry. How many times have you been to an all you can eat buffet and actually ate all the food you placed on your plate? I know in the past I’ve wasted a lot of food and try to avoid buffets simply because of this reason.
We’ve been ordering groceries online and picking them up at the store for a couple of months now. It’s worked out great because during the week we can go in and add, modify and even remove items that we thought we needed but then we thought about it some more, we really didn’t.
In goal setting, sometimes we challenge ourselves by trying different types of diets to achieve our health and fitness goals. Well, the same thing can apply in personal finance; if one financial challenge doesn’t work, try another one.
Let’s face it; we all have things that are important to us. Some of us like to try different and unique foods but can do just fine with a simple wardrobe. Some of us like to travel but are willing to eat peanut butter and jelly almost every day.
Just imagine, if we challenge ourselves for a bit, it will make our indulgences that much more rewarding in the end and in the process, we’ll save and feel good about accepting a challenge and achieving greater goals.
- Have you automated a lot of your finances and become a bit idle?
- How do you continue to optimize your personal financial satiation?
- What types of challenges have you set for yourself to start or continue your financial journey?
I use Personal Capital because (1) it’s free, (2) it tracks all of my accounts and overall net worth, (3) my account balances automatically update, (4) it shows how my investments are diversified and allocated in various sectors, and (5) can use built-in tools like “Investment Checkup” to get….wait for it…free personalized advice!