Money Girl gives advice on 4 key financial decisions that you should review every year.
Decision #3: What Legal Documents You Should Have
There are a few critical legal documents that everyone should have in order to make your wishes clearly known. Once created, update the following each year:
Last will and testament – is a document that every adult should have, no matter your age. If you die without a will, the courts decide what happens to your possessions and even to your children—not your family.
Review your will on a regular basis and make updates that may be necessary due to life changes such as, getting married, divorced, having a child, or becoming a widow or widower.
Power of attorney (POA) – is a document that allows you to give someone you trust, called an agent, the ability to make decisions for you. Your POA can be used if you’re not capable of making routine transactions, like paying bills or signing contracts.
Health Care Proxy – is also known as a health care surrogate or health care power of attorney. It allows you to designate someone to make medical decisions for you if you become sick or mentally incapacitated.
Each year, consider who you’ve designated as your POA and health care proxy and make any necessary changes. You can even appoint more than one agent, if needed.
Living will – is similar to a health care proxy, but only applies when you’re facing death, so you need both documents. A living will specifies what end-of-life care that you’d like to have, such as dying naturally or not.
If you don’t have these important emergency documents, there are online legal sites where you can download templates. But be sure to work with an attorney when you have questions or a complex situation.
Decision #4: How to Improve Your Credit Score
Your credit score plays a huge role in your personal finances because it affects what you have to pay for interest, insurance, and various utility deposits. Unfortunately, many of us don’t uncover problems in our credit reports until it’s too late.
Every year, give your credit a check-up by viewing or downloading your credit report for free at annualcreditreport.com. And by the way, checking your own credit never hurts it or gets counted against you in any way.
Look carefully for accounts that aren’t yours, which could indicate that you’re a victim of identity theft. If you see incorrect account details or personal information, submit an online request to get them corrected right away. Errors on your credit file could be dragging down your credit scores, and costing you money, without you knowing it.
See also: Credit Score Survival Kit - a free video tutorial with 3 smart strategies to build credit fast!
How to Make Financial Decisions
If you’ve been putting off important decisions and tasks, consider taking off a day from work to tackle your financial to-do list.
Start with the above 4 major decisions, but consider other ways to save or make more money:
- Open up a traditional or Roth Individual Retirement Arrangement (IRA)
- Transfer debt balances to a low- or no-interest credit card
- Shop for a less expensive phone or cable TV plan
- Create a budget and start tracking your spending
- Switch to a no-fee bank account
- Set new financial goals
Taking a day to improve your financial life will repay you many times over, not just for now, but for decades to come.
More Resources You Might Like
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