Some people have a bucket list of things they want to do before they die, but just as important is a financial bucket list. If you don't have a strong interest in personal finance, you might not understand all that's involved in keeping your money in good shape. And without a good understanding, you could overlook smart money moves. A financial bucket list, on the other hand, keeps the focus on your money, helping you make better choices. Here are nine must-haves for any list.
1. Paying Cash for a Car
Adding this to your financial bucket list might seem impossible, especially if you're paying tens of thousands of dollars for your vehicle. But given how quickly cars depreciate, buying a brand-new car almost guarantees that you’ll end up owing more than the car is worth in just a couple of years. If you save up and pay cash for a cheaper car, or at least put down half when financing, you’re likely to avoid negative equity.
2. Achieving a $0 Credit Card Balance
You might not be able to pay off your credit cards this year or next year — but, it’s achievable with careful planning. Call your creditors and negotiate a lower interest rate to lower how much you owe in interest each month. Also, cut your credit cards in half and then start doubling or tripling minimum payments. If you have a bunch of unused stuff in your house, sell these and put the proceeds towards debt.
3. Paying off Student Loan Debt
It can hang over your head for 10 or 20 years. Consolidate to a lower interest rate and then increase your minimum monthly payments. Also, avoid the urge to defer any of your student loan payments. Interest will continue to incur, which gradually increases your balance.
4. Supplementing Your 401(k)
Don't rely on your 401(k) for a comfortable retirement. Talk with a financial planner and discuss options available to you, such as supplementing with an individual retirement account. You can also open a savings account dedicated entirely for retirement, such as a high-yield online account or an online money market account.
5. Creating a 6 to 8-month Cash Reserve
Financial expert Suze Orman recommends a cash reserve of 6 to 8 months of income, which might seem like a lot. However, savings of this level can be a lifesaver if you lose a job. Pay yourself first when you receive your paycheck and set aside at least 10% of your income each month.
6. Giving More to Charity
Give back to your community or get involved with a local organization. If your time is limited and you can’t offer hands-on help, make a cash donation to an organization, or donate personal goods.
7. Buying Life Insurance
It doesn't matter whether you're single or have a family, buying life insurance should be a priority. The death benefit can provide financial support to your family for years to come, plus pay off any debts you have and cover funeral and burial expenses.
8. Preparing a Will
If you don't have much materially, you might feel that a will is unnecessary. However, a will is extremely important if you have children or any type of asset. If you don't express your wishes while you're alive, your family will have to sort out the details after you die. And if they can't agree, the courts will get involved.
9. Planning for Your Kid’s Education
College is expensive and it isn't getting any cheaper. And the longer you delay preparing for the cost, the harder it'll be to afford tuition, books and other supplies. Look into college savings plans offered by your state, such as 529 plans. Also, open a high-yield savings account dedicated to educational expenses and regularly contribute to this account.
This is only a sampling of must-haves for a financial bucket list. Take a look at your own situation, and if there are financial goals that you’ve yet to reach, add these to your list and create a plan for hitting the mark. What’s included on your bucket list?