Every time you open your email you’re probably approached about yet another supposedly critical financial product you need to have. But how many of these new products have that important a role in your financial future? The answer is very few of them.
There are some old and new financial products. However, that does fill a vital purpose in your current and future fiscal success. Here are five of them, in no particular order.
Your retirement may seem far off into the future, but if you don’t start saving for it now, then you’re going to have a higher burden of savings later. Retirement accounts offer you tax benefits for contributions, making them a must-have. These are things like a 401k, IRA, or TSP plan. I’m a big fan of 401k’s that have a match, and Roth IRA’s – because I hate paying any more in taxes than I absolutely have to.
Free Checking Accounts
There is no reason you should pay for a checking account when free accounts are everywhere. Find out what local credit unions offer free checking for auto deposits or minimum balances you can maintain. Credit unions almost always have better rates than banks, and the smaller the institution, the better you’re treated as a member. I would close any accounts you have with Chase, Wells Fargo, and (God help you) Bank of America before the end of the day.
Online Savings Accounts
You need a place to put emergency savings that you can get to quickly, and a savings account is usually ideal for that. Online savings accounts pay money market rates on deposits, giving you a higher rate of return on the cash you have in them.
Life insurance is a tool that offers many benefits. It can help your family replace your income after you pass away, it can help your loved ones afford your burial expenses, it can help your cosigners pay off student loans, and it can ensure that your kids can afford college. I usually recommend having 10x your annual income in coverage until you have enough money in the bank to be self-insured.
Be careful here, because not all life insurance is created equal. A 20 or 30-year level term life policy is almost always the best bang for your buck. Whole life, universal life, or any gimmicky policy that has a savings or investing element to it is essentially hot garbage. The lack of termination date is interesting, but you pay an unbelievably expensive premium for it. What’s worse is that should you pass away, the policy pays only the face value of the policy and they keep any money you’ve invested! Hot, dumpster fire garbage!
Property and Casualty Insurance
Property and casualty insurance policies are some of the most important products you can use to protect your money because they provide reimbursement for losses on the covered property as well as liabilities due to their operation. What kind of insurance is best for you? It depends on your situation and needs, but some of the primary types you should consider include home insurance, renters insurance, and auto insurance.
According to the Insurance Center, homeowners insurance coverage extends from the outside structure of your home to all of the corners inside of it. Renters insurance covers your property and any liability you have when a visitor is injured. Auto insurance can cover your car and your potential liabilities after causing an accident.
The right financial products can mean the difference between financial security and loss. Maintain your status by looking into them today.