Do you realize that when your life is over, you will have left behind a financial legacy? In fact, good or bad, it’s being created right now.
Perhaps you would argue that only the rich leave a financial legacy. If so, I would contend that you have an incorrect understanding of what a financial legacy truly is.
WHAT IS A FINANCIAL LEGACY?
Your financial legacy is about much more than the value of your estate. It has more to do with how you handled your money and the financial decisions you made during your life than the money or possessions you leave behind.
Here are a few questions you may want to ask yourself. Your answers, your “why,” can help you determine if the financial legacy you will leave behind helps or harms those you love.
- Do you have a history of making good or bad financial decisions? Examine those stand-out choices and ask yourself why you made them and what you would do differently if you could.
- Do you have and adhere to a budget? You either control your money, or it will control you.
- Do you live by the 80/10/10 principle? This means live on 80%, save 10% and give 10% to charities or your church.
- Do you live within your means and pay your bills on time? This real-life example speaks to your children and loved ones, good or bad.
- Do you have an emergency fund, even a small one, so that unexpected expenses don’t create chaos and instability? Statistics tell us that much of the population couldn’t come up with $400 in the event of an emergency. What about you?
- Are you saving for retirement? How will your older self feel about the life she lives due to how you planned for her retirement? I believe saving for your retirement should have a higher priority than money for your children’s college.
- What is your view of money? Money is simply a tool. Are you using this tool of money appropriately?
- Have you talked with your children about money? If you don’t teach them a proper view of money, who will?
- Do you have a record of your debts and assets that you keep updated, as well as online logins and passwords? Does someone know where the records are and how to access them?
- When you need money, is your first response to borrow from your retirement plan instead of investigating other options? Are you willing to quit your job, pay the IRS penalty and taxes simply to get your hands on a few hundred or thousand dollars?
- Are you a giver? Do you contribute to local charities, your church and people in need?
- Do you have disability coverage that will help in the event of a health crisis?
- Do you have life insurance, and is it sufficient?
- Should you pass away unexpectedly, will your loved ones be able to pay your final expenses without resorting to loans or Go-Fund-Me-type appeals for assistance?
- Do you have debt? How would it be paid without your income?
- Do you have a will or estate plan? Has it been reviewed and updated recently?
- How would your loss of income impact your family financially? Financial instability compounds grief.
Delaying or avoiding making financial decisions is making a decision. Seek advice from professionals or financial savvy people you trust. Choose to make the tough choices.
Remember, your day-to-day life is the foundation your legacy is built on, so start today.
