Know that "World's Greatest Dad" T-shirt you sport every Father's Day? Well, you deserve it. You not only work hard from 9-to-5 to provide your family with a good life, but also dutifully slog through your honey-do list and attend your kid's swimming classes.
Source: Wikimedia Commons.
In return for the love your kids will show you this Dad's Day, give back to your family by implementing four personal financial planning musts.
1. Review your beneficiary designations
Check your beneficiary designations annually. That might seem like overkill, but it's a good habit to get into. You may have been so busy changing diapers that your sleep-deprived self forgot to add your 6-month-old infant's name to your accounts. Review your current beneficiary designations and make sure they're up to date. Remember to do so for all of your IRA accounts, 401(k) plans, and life insurance policies.
2. Review your insurance
It's important that you maintain an appropriate amount of life insurance. That way if something happens to you, your family's future financial planning needs will be adequately covered.
Your employer may offer you life insurance as part of a group plan. Typically, the coverage you're granted is either a flat dollar amount (like a $50,000 death benefit) or a multiple of your salary (say, three times your annual base salary). But that amount of coverage may not be enough for your family. If it isn't, be sure to supplement with either a term or whole life policy.
Also, consider disability insurance. Again, your employer likely offers coverage up to a certain amount. But make sure it's enough to fund your family's needs in the event you can't work for a while.
3. Designate a guardian for your children
Lots of parents get stuck when they go to choose a guardian. They often disagree about who would be best, and no one likes to think about someone else raising their kids. But if you haven't made your wishes clear, the court will appoint someone without any guidance from you. Most commonly, the courts choose a member of the family. But maybe you don't want certain family members raising your children. The best way to prevent this from happening is by sitting down with your spouse, hashing out the particulars, and getting the paperwork done.
4. Save for your kid's college
It's never too soon to start saving for your child's college education. With the average out-of-state public university education costing $34,000 annually, it takes discipline and sacrifice to scrape together that kind of dough. The best way to amass that money is with a 529 college savings plan. Withdrawals used for qualified higher education expenses like tuition, books, and room and board are tax-free. Some states allow you to deduct part of your contribution annually on your tax return. And 529 plans also give you the flexibility to switch beneficiaries, which is great if you find out one kid isn't college material, yet the other is Harvard bound.
Foolish final thoughts
Take time this Father's Day weekend to deservedly kick back and relax with your family. But shortly after the celebration is over, implement these personal financial planning essentials. You and your loved ones will be better off for it.
