Tag Archives: finances

3 Money Mistakes Newlyweds Make

Being a newlywed is awesome. I reflect on that season of my life as one filled with joy and anticipation. Sure, that first year of marriage was full of challenges, enormous adjustments and unexpected changes, but on the whole it was great.

We found such relief in finally being married and out of engagement. Engagement is a funny time. You often take on new priorities and responsibilities you’ve never had before (like part-time event planner), and that can wear on you and the relationship after awhile. Engagement is meant to be a temporary phase in life, and most friends I know, myself included, have been thrilled to see an end to it — the lists, planning, preparation, etc. In the midst of all of the planning and celebrating, the topic of money is often overlooked (aside from the wedding budget). Yet studies tell us money is a top cause of conflict and divorce among couples. Money can be hard to talk about. Our culture has made money-talk a taboo subject, which can make it all the more difficult to start talking about money (regularly) with another person, especially if you were used to keeping your money matters private for so many years.

Here are a few money mistakes I see newlyweds make. Regardless of how long you’ve been married, though, it’s always important to check in and make sure you’re not letting the important things fall by the wayside.

1. Forgetting to Update Important Plans and Documents

When you start a job and enroll in your employer’s various benefits, you are prompted to assign beneficiaries to things like your 401(k), group life insurance, even an emergency contact in some instances. Getting married means it’s time to review these beneficiary designations.

You should also review current insurance policies and see if you need to add your spouse to the plan or review your coverage entirely. If you are both on individual health insurance plans through work, it’s worth comparing the cost of keeping your individual plans versus one of you joining the other’s plan. It’s possible you’ll save money by being on the same plan. When evaluating the cost, consider monthly premiums, deductibles, co-insurance and co-pays.

If you happen to have estate-planning documents like wills, health care proxies, living wills, etc., these documents also warrant review and updating when you get married.

2. Overlooking the Need to Get Organized

I know, it’s one more administrative thing that’s not fun to think about or act on, but it is important to be organized. If you don’t talk about it, habits will naturally form, and you’ll likely end up with unnecessary confusion and stress, which can lead to conflict. Don’t be scrappy with your finances. I survive by being scrappy as a parent (I’m a mom of two toddlers). But this ability doesn’t translate as well with finances.

Try this: Sit down and list out all the accounts each of you have and then talk about which accounts you want to join, leave separate, combine, close, etc. Simplicity is a wonderful thing. Decide which account(s) you’ll use for routine expenses, where you’ll keep your emergency savings, longer-term savings and investments. Even if you plan to keep accounts separate, have this conversation so it’s intentional and there’s no confusion about how bills and shared expenses will be handled.

You can also make your credit reports a part of this process — so you both have an understanding of each other’s credit history, and create a plan for building better credit, or maintaining your great credit if you have it. If you’re not familiar with your credit reports, you may find them to be overwhelming at first — here’s a guide to deciphering your credit report. You can get your free credit reports once a year from each of the three major credit reporting agencies, and you can get a free credit report summary on Credit.com, updated monthly.

3. Avoiding Money Talks

Money is a leading cause of conflict and stress for couples, which can be enough to discourage some people from discussing the topic at all. If you learn to talk about money early on (especially when times are good and emotions aren’t running high), you’ll be prepared when money issues arise.

Talking about money feels like creating a new habit. Sometimes you just have to start doing it, even before you’re comfortable doing so, and allow the habit to take shape.

Here are a few starting points for your conversations about money:

  • Your history with money (What lessons about money did you learn as a child?)
  • Current stress points with money
  • Goals you hope to achieve with your money
  • Expectations for your current lifestyle and how you want to use your money
  • Spending habits (Where do you spend money the easiest, with most resistance?)

A Word of Encouragement

Financial unity and stability with your spouse is a process. You don’t have to have all the answers or all of the kinks worked out from the beginning.

If you and your spouse have different approaches to money, (how you spend versus save, what you value, etc.), this doesn’t have to mean never-ending conflict. It’s possible you both need to learn to compromise, and pushing each other toward a middle ground may be the healthiest thing for both of you. And that’s one of the great benefits of marriage — the messy but beautiful process of refining each other and growing together in ways you never could alone.

This article originally appeared on Credit.com and was written by Julie Ford.

auto insurance industry

$60 Billion Elephant in the Room

Research has found that one in four car crashes is caused by phone-related distracted driving. However, a recent LifeSaver study of agents suggests this figure to be a vast understatement. More than 60% of agents responded that half or more of all claims are now related to distracted driving.

It’s downright scary to think about the injuries, property damage and loss of life that results from distracted driving.

If our survey bears out on a national scale, the full cost could be north of $60 billion a year. And, of course, this cost is passed on to drivers in the form of increased premiums. In fact, we’re already seeing some major insurers (GEICOAllstate and Zurich) publicly conceding that they are feeling the pain from this fast-growing epidemic.

Assuming the annual cost to insurance companies ranges from $30 billion (if one in four accidents stems from phone-related distracted driving) to $60 billion (using the numbers from our research), a mere 10% reduction in distracted driving accidents would save insurance carriers and their customers several billion dollars annually, in addition to saving lives and drastically reducing injuries.

The infographic below highlights the cost of distracted driving to the insurance industry. It also offers some insight into the minds of insurance agents receiving these claims, as well as the habits of today’s distracted drivers. Take a look and let us know your thoughts in the comments below.

info

retirement

75% of People Not on Track for Retirement

A new study shows that three in four Canadians are not on track for retirement. With the recent economic turmoil, many working Canadians are struggling to make ends meet as it is. The same survey indicated that half the population is living paycheck to paycheck, and very few have any emergency savings built up. Living in the moment means that they’re not focused on retirement goals, and many expect to be working several more years as a result.

Although workplace pensions, the Guaranteed Income Supplement (GIS), Old Age Security (OAS) and the Canada Pension Plan (CPP) can provide funds, it’s often not enough. Moreover, the higher your income is now, the less likely you are to have your future needs met by these types of programs. If you’re among the 75% who are not on track to retire, here are the changes you need to make now:

Take a Hard Look at the Money Coming In

You’ll need to set a budget, but long before you get to it you must have a full accounting of how much money is coming into the household. Then, you’ll need to deduct between 20% and 30% of the gross for emergency expenses and retirement. Focus on building emergency savings that will cover you for three to six months first.

Eliminate Bad Debts

Carrying a balance for a mortgage or vehicle isn’t usually a problem, but more and more Canadians are maxing out credit cards and racking up other smaller debts. These things should also be knocked out of the way first.

Say Goodbye to Luxury Spending

While the older population is much better at assessing value and affordability, the younger generation is geared toward luxury items. Expensive cars, lavish clothing and trending technology add to debt. If you aren’t on track for retirement, and you’re carrying unnecessary debts, you should get yourself back on track and only purchase essential and value-oriented products.

Reevaluate Your Investment Choices

Unfortunately, many investment firms take a chunk of payments, and they fail to deliver in returns. Do a cost-benefit analysis and see if you need to consider moving your money to another firm or program. Diversification, both on a local and international level, is essential, as it provides a kind of insurance in case the economy falters. Think beyond stocks, as well. Bonds, commodities and real estate holdings can provide extra layers of security.

Use a Budgeting Program

There are numerous options available, but they all serve the same essential function. Using software or an app to track expenses takes the brainwork out of it and enables you to stick to your budget without having to work so hard.

Incrementally Increase Retirement Savings

As you pay off your debts and eliminate your mortgage, and your children become self-sufficient, you’ll obviously have more money to spend on yourself. Many people jump into doing the things they’ve been holding off on, like vacations and home remodels, but this becomes a slippery slope. As you find yourself free of expenses and debts, it’s imperative to increase your retirement savings, as well. During your last decade or two of work, your goal should be buildings toward setting aside 60% of your income for retirement. Some of the cash should go into savings, but a fair amount should be invested into dividend-paying stocks, which will add a steady trickle of supplemental cash as your non-working days progress.

Reevaluate Your Goals and Get Expert Advice

Even though most people can benefit from visiting with a financial planner, very few people do. You don’t have to be wealthy to benefit from one, either. A financial planner can help you figure out ways to minimize debts and how to save and may be able to help you get lower interest rates on the debts you already carry. If you choose not to visit a financial planner, you should still reevaluate your budget and strategy on a regular basis. This way, you can find ways to increase your savings if you aren’t setting aside enough, or enjoy more of your income now, provided you’re on track for retirement.

There was a time when a person could outright retire at a certain age, but it’s not like that any more. Today’s workers have to contribute more on their own to be able to maintain the same standard of living, and they have to work longer to be prepared. It’s still possible to retire at about the age your parents and grandparents did, but it requires more planning on your part.

What’s Next for Life Insurance?

If you are thinking that what’s next for the life insurance industry has something to do with the experience surrounding buying and owning life insurance products, think again.

Yes, the life insurance industry has a big opportunity to improve the customer experience. Companies are improving the complex and inauthentic language used in communications, improving engagement levels with consumers, reducing friction in the underwriting process and creating the ability to transact in an omni-channel way. We are even seeing new peer-to-peer models cropping up for other insurance lines, and it is just a matter of time before life insurance becomes a focus within them.

And, yes, the life insurance industry now at least has a handle on what needs to be done to improve the experience. Companies are putting significant effort into catching up to other categories. Some of the progress is coming from within the established carriers, and even more of it is coming from disruptors that are improving the model rapidly, giving established carriers new capability to buy instead of building.

So the industry is just a short time away from meeting the demands of today’s consumer. Bravo!

But the industry needs to get beyond improving today’s experience and focus on what’s next. And what is that?

Are you ready? Well, here it is: Death just isn’t what it used to be.

Social, scientific and technological advances have dramatically reduced the probability of death for those under the age of 55. This is the group of people whose untimely death would cause the greatest financial burden on families and businesses and is the group we depict as needing life insurance most.

Granted, many life insurance policies sold are issued on older people to implement tax strategies. However, the original intent of the insurance industry was to protect families and businesses from becoming destitute as a result of the loss of a breadwinner or key person.

What happens if that probability is significantly reduced? Do we continue to try and find more “death pool” needs. Or, do we find new needs that our unique skills and competencies can solve?

What’s next, in my opinion, lies in the latter. We can define our business more broadly. Are we in the business of “insuring” lives or “assuring” them? In other words, are we assuring that someone will live longer by avoiding or recovering from the things that are likely to cause death, such as drug use, cancer and suicide?

What does this question mean for what’s next in the insurance industry?

First, let’s examine avoidance. Could life insurers use technology and probability to help individuals and communities further reduce the likelihood of accidents? We need to go beyond driving and household safety tips and into true early warning systems or algorithms that can enable consumers to be proactive.

Could we better predict the likelihood of suicides or accidental drug overdoses? Could we help people understand the role of new, emerging risks such as “hackccidents”? (This is my term for an accident that is a result of human intervention into a computer system that may be controlling a car, a train, a plane or some other technology.)

Secondly, let’s examine recovery. Suppose someone has an incident, and death is now imminent. Could the life insurance industry guarantee access to the latest technology? Could it design investment futures (similar to investments in gold or pork belly futures) in the ability to get an organ transplant or expensive medicine or to be frozen until a cure arrives?

This may all sound far-fetched, but how far-fetched did the innovations of today sound just 10 years ago?

Hmmm.

This article first appeared in National Underwriter Life & Health Magazine