10 Keys to Finanical Peace

In my work with estate planning clients, I often do more than just help people with their wills.  I also help families create and protect their wealth.  It amazes me how much financial stress there is for families today and it seems every day there is a new book out there to help you manage your money.  Based on my own experiences, and those of my clients, I have come up with my own list of the ten keys to financial peace.

1. First, take care of your basic needs.  Save three to six months of expenses in a money market account.  It is hard to be calm and peaceful when you know that the slightest emergency could destroy your family's financial security.  Having money in the bank for emergencies will help you sleep better at night.  Along the same lines, you should pay off credit card debt.  Credit card debt is a symptom of living beyond your means, and it is impossible to get ahead financially while you are working to pay high interest rates to other people.
2. Protect yourself and your family with the right kinds of insurance.  Make sure you have adequate health insurance, disability insurance and life insurance.  For most people, term life insurance is the best bet.  Also make sure your home and auto are adequately insured.  If you are over age 50, consider investing in a long term care policy to provide for nursing home care should you ever need it.
3. Secure your retirement.  A good rule of thumb is that you should be saving between 10-15% of your income towards your retirement.  If your employer offers a 401(k) plan, take advantage of it.  If not, save in a Roth IRA or traditional IRA account to the extent you are eligible. 
4. Plan for potential incapacity.  See your estate planning attorney to execute a durable power of attorney and appoint a trusted spouse, family member or friend to make decisions for you in the event you become incapacitated.  This will help your family avoid an expensive interdiction proceeding if you become incapable of managing your own financial affairs.
5. Write a will.  A will determines who gets your property when you die.  If you don't have one, Louisiana law will determine who gets your assets.  You may not like what the state has planned for you.  With a will you can control not only who gets your property, but you can also create testamentary trusts to protect your children's inheritance from poor management.
6. Review your beneficiary designations on life insurance and retirement accounts.  Have your estate planning attorney review these to make sure they fit in with your estate plan and take advantage of any opportunities to avoid and defer tax liability.  Review them again whenever you have a major life event, such as a divorce, marriage, or the birth of a child.
7. Protect your kids.  Make sure you take advantage of the opportunity to choose a guardian for your minor children should something happen to you.  Also, make sure you have sufficient life insurance to take care of your children financially in the event of your death.  Don't name your children as outright beneficiaries of life insurance policies.  Life insurance proceeds for minor children should be left in trust whenever possible.  Otherwise, they will have full access to the money as soon as they hit age 18.
8. Avoid unnecessary estate taxes.  If your estate is over $1 million, you need to work with an estate planning attorney to ensure you take advantage of all possible opportunities to avoid estate taxes.
9. Mind your business.  Make sure your business is properly structured and operated to preserve liability protection.  If you are incorporated, see your attorney once per year to make sure your corporate records are being kept up to date.  If you need assistance with payroll or tax reporting, get a CPA to assist you.
10. Give.  Being able to give back to your church or community is one of the greatest rewards of sound financial management.  There are numerous benefits to charitable giving.  It not only feels good, but also carries substantial tax benefits with it and may be an important part of your financial plan.

My list may seem overwhelming at first, but is very attainable.  The most important thing is to get started.  Depending on where you are on the list, set some goals and begin to work on them.  As you make progress on small goals, the momentum will carry you forward to the bigger ones.  And, remember you do not have to do this alone.  Your estate planning attorney, accountant and financial advisor are there to assist you every step of the way.  If you do not have relationships with these professionals, your first step should be to find them.  Ask around for referrals from trusted friends and business associates until you find an advisor you can trust and feel comfortable with.  Your reward will be the peace of mind of knowing your family is protected.