Financial Risks You Can Control

By: Danielle Walters of HomeStar Bank & Financial Services

There are many things in life that are out of our control. To prepare yourself for the unthinkable, focus on what you can control. Those that will make the biggest financial impact on you and your family’s life are listed below. Need help with any of these services? Stop by a HomeStar Bank & Financial Services branch for assistance.

1. Manage Cash Flow: It is hard to live within your means if you have no idea where the money is going. Regardless of your income level, the key to reaching your financial goals is starting with a simple task – tracking your income and expenses.
 

2. Limit Your Borrowing: Whether it’s for a house or for your child’s education, carrying too much debt can prevent you from taking care of important financial goals and can also create a huge emotional burden. 

3. Establish An Emergency Reserve Fund: Bad luck can occur at any time, so it is vital to save an easily accessible, liquid cushion of 6 to 12 months’ worth of expenses if you are still working and 12 to 24 months if you are retired. 
 


4. Buy Sufficient Life Insurance Coverage: If you have dependents, prepare for the worst-case scenario by purchasing adequate life insurance. 


5. Contribute To Retirement As Early As Possible: Ask any retiree about the biggest mistake he or she made and it will likely be “I should have started saving sooner!” Establishing the automatic saving habit early pays huge dividends in the future. 

6. Leave Retirement Funds Alone: While the IRS does allow for hardship withdrawals in certain instances, too many workers who leave their jobs cash out plan assets and pay a tax penalty instead of rolling over the funds into another retirement account. 

7. Manage Retirement Funds: Whether it’s not rebalancing, owning too much company stock or using high-fee funds, retirement savers are costing themselves money with easy-to-rectify oversights. 

8. Wait To Claim Social Security: You can claim Social Security retirement benefits as early as age 62, but doing so will permanently reduce your (and potentially your spouse’s) monthly income by as much as 25 percent. 

9. Draft A Will / Power Of Attorney / Heath Care Proxy: Don’t create a mess for your heirs. Draft the necessary estate documents now. 

10. Seek Help: If you want customized services, I recommend working with a professional who has earned the CFP certification or is a CPA personal financial specialist. You can ask for referrals from friends or colleagues or your banker. 

Need assistance? Call (815) 468-BANK (2265) or stop by one of our five branches and someone from our Deposit Team will assist you. 

 

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