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Research shows Americans are coming up short when it comes to being financially prepared. In fact, LexisNexis reports that more than 55 percent of American adults do not have a will or estate plan.
A study by LIMR, a financial research company, revealed 50 percent of U.S. households say they need more life insurance. When it comes to monitoring finances, American consumers don’t fare much better: the Federal Trade Commission reports that one in five consumers had an error on at least one of their credit reports.
So, what should people do to improve their financial readinessA!X How vital is financial spring cleaning to overall financial healthA!X
“It is very important. But keeping your financial house in order often is one of those things that gets pushed down on the priority list,” said Tena Lozano, consumer advocacy manager for the California Credit Union League.
Lozano recommended people examine their financial situation at least annually, and even more frequently after reaching retirement age.
“A will or estate plan is one of the most important things you can do for your family,” Lozano said. “Having a will avoids a great deal of unnecessary legal action for the family.”
She also recommended updating a living will each year as well, and especially when there’s a major life event like the birth of a child or a change in marital status.
Lozano said it is also important for people to check their account balances and statements regularly.
“It is also extremely important to know what is in your credit report,” she said. “People often are surprised at what is in their credit report when it gets pulled for a loan. Checking your report annually will help you keep it free from errors that could potentially cause you to pay more for a loan.”
Here are 10 tips for putting your financial house in order:
1. Update your will as needed.
2. Take a video tour of your house for insurance documentation and store it in a safe deposit box.
3. Make sure your personal information is up to date with all financial vendors.
4. Update the beneficiaries for all your accounts and insurance policies.
5. Review your insurance coverage and make necessary adjustments.
6. Check your credit report carefully for any errors. You can request a free copy of your credit report by visiting www.annualcreditreport.com.
7. Reassess your retirement plan and monitor retirement accounts.
8. Examine your loans for refinancing opportunities. You may be able to lower your monthly payment or pay the loan off sooner. One option is to seek out the services of your local credit union, which often can provide lower rates and loan fees than other financial institutions.
9. Go through financial files and toss what you don’t need. Keep tax returns forever, but throw away supporting documents after six years. Be sure to shred any sensitive information.
10. Make a comprehensive list of financial information including all accounts, property deeds, insurance policies, estate plan and living will. Make sure a spouse or family member knows where to access the records if the need arises.
(Shel Segal can be reached at email@example.com. He can be followed via Twitter @segallanded.)
-Story by Shel Segal