Most people set up their financial plan once and then don't look at it again for years, but elements like beneficiary designations, insurance policies, and emergency savings shouldn’t be forgotten. Life changes, but the financial details don't always keep up. A quick review now can catch problems before they turn into real issues down the road.
You don't need to overhaul everything; check these three things to make sure they still match your current situation.
- Check Your Beneficiary Designations
Beneficiary designations are one of the most overlooked parts of financial planning, but also one of the most important.
When you opened your retirement accounts, life insurance policies, and bank accounts, you named beneficiaries: people who would receive those assets if something happened to you. Those designations override your will, no matter what your will says. If your beneficiary designation says one thing and your will says another, the beneficiary designation wins.
As life changes through marriage, divorce, having kids, and losing parents, the beneficiaries you named years ago might not make sense anymore. Pull up your beneficiary designations and make sure they're current. This includes retirement accounts (401(k), IRA, Roth IRA), life insurance policies, bank accounts with payable-on-death designations, and investment accounts with transfer-on-death designations.
If you're married, your spouse is probably your primary beneficiary, but check your contingent beneficiaries too. These are the people who would inherit if both you and your spouse passed away. If you named your parents as contingent beneficiaries when you were younger and they've since passed away, you need to update that. If you named your kids but didn't account for what happens if one of them predeceases you, that's worth addressing.
We can help you review these designations to make sure everything is set up correctly. Fixing beneficiary designations takes 10 minutes and could save your family months of legal headaches later.
- Review Your Emergency Fund
An emergency fund is cash set aside for the unexpected: job loss, medical expenses, major home or car repairs, anything that would otherwise force you into debt or make you sell investments at the wrong time. The standard advice is three to six months' worth of living expenses. Most people either don't have an emergency fund at all, or they have one that's too small. Spring is a good time to check where you stand.
If you don't have an emergency fund, start building one. Even $1,000 set aside gives you a cushion for smaller emergencies. From there, work toward one month of expenses, then three, then six. If you already have an emergency fund, make sure it's still the right size. Your living expenses might have changed since you first set it up. If you've had kids, bought a house, or taken on new financial obligations, your emergency fund probably needs to be bigger than it was a few years ago.
Make sure the money is actually accessible. An emergency fund should be in a savings account or money market fund, something you can get to quickly without penalties or market risk.
- Review Your Insurance Coverage
Insurance is one of those things people set up and then forget about, but your insurance needs change as your life changes.
Life insurance: If you have young kids or a spouse who depends on your income, you probably need life insurance. If your kids are grown and financially independent, you might not need as much. If you bought a policy years ago, check whether the coverage amount still makes sense.
Term life insurance is often the right fit because it's affordable and straightforward. If you have a whole life or universal life policy, make sure you understand what you're paying for and whether it still fits your needs.
Disability insurance: If you're working and your income supports your family, disability insurance matters. Most people underestimate how likely they are to become disabled before retirement. Check if you have coverage through your employer and make sure you understand what it covers and how much it pays.
Homeowners or renters insurance: Make sure your coverage limits are still accurate. If you've done renovations, bought expensive items, or your home's value has increased, your policy might not cover the full replacement cost anymore.
Umbrella insurance: If you have significant assets like home equity, retirement savings, or investment accounts, umbrella insurance adds an extra layer of liability protection beyond what your home and auto policies cover. It's relatively inexpensive and worth considering.
Insurance planning can be complex, and working with a local Montana financial planner can help you understand what coverage you actually need. Spending 30 minutes reviewing your coverage now could save you or your family from serious financial problems later.
Working with a Financial Advisor
If you're not sure whether your beneficiary designations are set up correctly, how much insurance you need, or if your emergency fund is adequate, consider working with a financial advisor who understands Montana families and their unique planning needs. Sometimes all you need is a second opinion or a planning session to make sure you're on the right track.
At Down Home Financial in Geyser, Montana, we help families across Montana with financial planning, retirement strategies, and making sure the basics are covered. If you want to talk through any of this, give me a call. This is exactly the kind of planning I work through with families.
Ty McDonald is a financial advisor at Down Home Financial in Geyser, Montana. To discuss your financial planning needs, reach out at (406) 625-3368.