Bucket lists of all types are great. They inspire people to do more in order to reach certain goals over a lifetime. A bucket list of the financial kind is the best because it teaches and motivates us to manage our money and cash flow better.
To start a financial bucket list, the framework should consider three important factors in financial planning:
Remember these three are interrelated. What you don’t spend, you save. And what you save, you should invest. Pretty simple, isn’t it?
Another important component is your actual goals and the time frame you’re giving yourself to achieve them. What do you want to achieve and when?
If you’re not too sure what to include, here are some financial milestones you should consider putting.
1. Freedom from debts
Who has not tried incurring debt? Even the richest people on the planet have at least one debt waiting to be paid.
You see not all debts are bad. Bank loans that went into different types of investments will eventually pay off. What you should watch out for are the bad debts, like that growing credit card debt you only pay the monthly minimum for.
If you can’t curb your reckless spending, cut off your card and pay your debt in full. As much as you can, aim to be debt-free.
2. A three-month emergency fund
There’s a reason why being debt-free comes first. Any extra income saved can easily go into your emergency fund that will help cover unforeseen circumstances coming your way.
Three months’ worth of your salary is a safe amount because this means you’ll have money to spend just in case you can’t work or have an income. It will tide you over while you’re recovering.
Keep your emergency fund in a bank account so it can also earn a bit of interest over time.
3. Multiple investments
Saving your money in bank accounts is not enough. You need to find a way to make it earn for you and you can do that via investment.
One way to invest is via a VUL insurance like FWD Set for Life. It’s a plan that allows you to have both insurance and investment. You have a life insurance to protect your family financially and you have an investment component that you can put in different funds of your choice. These funds are handled by professional investment managers.
Another way to invest is via mutual funds. It’s a pooled fund that’s again handled by professional fund managers. It’ll be up to you which fund you want to invest your money in.
There are actually other types of investments like government and corporate bonds, time deposits, and UITF. It will be best to talk to financial advisors who can tailorfit your investments to your needs.
4. Retirement Plan
It’s heartbreaking to see senior citizens still working due to lack of proper retirement planning.
You think you’re too young to be considering retirement? There’s no such thing as being too early. In fact, the early you start, the better nest egg you can build for your retirement days.
As early as now, think about your sources of retirement fund. Is it sustainable? Will it be enough for your needs and lifestyle? Think about your future expenses and compare that with the retirement amount you’re targeting.
5. Critical illness insurance
Believe it or not, this type of insurance has become quite a necessity nowadays with people getting diagnosed with cancer and other critical illnesses, left and right.
And it knows no age now. As young as 35 years old are getting diagnosed.
The unpredictability of getting sick with critical illness is the reason why it’s important to get protection.
Treatment cost and medicines can drain your savings in an instant and a critical illness insurance will help stave that off.
FWD Set for Health, for instance, lets you claim three times for three unrelated covered critical illnesses so you don’t have to worry over where to get money for your treatment. You can just concentrate in getting better.
6. Real estate
Another item that should be in your bucket list is real estate. As an investment, real estate is stable. It rarely depreciates. As an asset, it’s a good thing to have. You can use it, sell it, make it as collateral.
There are actually a lot more items you can include in your financial bucket list but these six are the ultimate ones and, as much as you can, ones you should concentrate on.
They’re not easy to accomplish but hey, it’s not called financial bucket list if they’re all so easily achieved, right?