Financial Future

Personal finance has left many middle-income American families struggling. How can you save for tomorrow, provide for today and achieve financial freedom? First you need to "build a financial foundation." Investment expertise is not required and is not the most important step to financial freedom for the average American family. You don't need to be a financial guru and you don't need to have a lot of money. What you do need is a plan.

When it comes to saving, investing, and generally protecting your financial security…sooner beats later every time.

Beginning today take responsibility for and control of your financial future. You take control when you convert your dreams into goals. Formulate your goals so that they are specific and realistic. Determine your current financial condition, then develop a plan to accomplish your goals. The best day to have started working toward your goals was yesterday. The next best day is today!

To build your financial future on solid footing you need to:

1. Get a decent education. You need a career not a job. The new Census data found that adults 18 and older with a bachelor's degree earned an average of $51,554 in 2004, compared to $28,645 for those with only a high school diploma.

2. Get an emergency fund set up. Have a minimum of three to six months worth of living expenses set aside in case of an emergency. Keep your emergency funds separate from your regular savings account.

3. Get your debt paid off ASAP. You cannot be financially secure with debt.

4. Make sure you have replacement coverage on your Homeowner's Insurance. If you own a home, no matter how modest, you can't afford to be without this coverage. If you want to keep costs down, choose a higher deductible. If you are renting, insure your personal possessions.

5. If you have family depending on your income, buy term life insurance. The amount of life insurance you need depends on your income, number of dependents you have and your debts. The general guideline is between five and ten times your annual salary.

6. Get disability insurance as soon as you can afford it. You are much more likely to become disabled than to die and Social Security Disability Insurance is very difficult to get. Your greatest asset is your ability to earn income.

7. Protect yourself against financial disaster with health insurance. No matter how old you are, you need health insurance to protect yourself against financial hardship if you become seriously ill or have an accident. If you can't get health insurance through your employer, then purchase your own individual policy. If you can't afford the premiums, buy a policy with a high deductible ($5000 for example) to limit your exposure.

8. Get decent Auto Insurance Coverage. Most states require you to have at least liability insurance on your vehicle. Collision coverage pays for repairing your car if you hit something. Comprehensive coverage covers other types of damage such as theft, fire, flood, falling objects and so on. Go with a $500 deductible on both and drop this coverage if your car is worth less than $3000 in value.

9. Contribute to a 401(k) plan (if available) or get an IRA. The younger you are when you start contributing to a 401(k) or IRA, the less you'll need to invest, thanks to the power of compounding interest and the length of time until retirement.

10. Prepare a Will. As soon as you acquire your first asset as an adult, get married or have a baby, you should make a will. If you die without a will the state will decide who gets what, including guardianship of your child.