How to leave a legacy

My 3-year-old daughter is just starting to understand the concept of memory, and as a result, almost every third sentence begins with, “Do you remember?” She is reading details about something she and I shared. When she asked me if I remembered the dark rollercoaster ride we took in December, the ducks who stole our potato chips in April, and the birthday party I threw her last week, I couldn’t help but wonder, “How will she remember? Me?”

Why are we thinking about legacy now?

My question sounds bleak, but as a mother who lost her own mother, I fully understand that life is not permanent. Because of my history, I have been proactive with my finances. I have life insurance and a will, making sure that no matter what the future may hold, my daughter will be provided for.

While finances are an important piece of the age-old puzzle, intangible assets are just as important – memories, experiences and values. An inheritance should include both financial and emotional components so that your loved ones can feel comfortable in both the assets you leave behind and the values ​​you pass on.

Here’s a primer on how to leave a legacy for your loved ones.

Take control of your finances (if you haven’t already)

We all know that babies are expensive. Whether you’re expecting your first child or your youngest, managing a growing family’s budget can be difficult. According to a recent study, 53% of millennial parents have less than $5,000 in savings.

Saving is hard, but don’t bury your head in the sand when it comes to finances. Know what you have, including retirement accounts and investments, and what you owe, including student loans or other debt. Knowledge can help you choose a saving strategy as you can know what is going well and which areas may need more attention.

Create a worst-case scenario plan

If you or your partner died unexpectedly, how would you care for your children?

Thinking about “what if” scenarios may not be fun, but you need to do it if you want to create a realistic emergency plan to protect and provide for your family.

Life insurance is part of that emergency plan.

The lump sum payout from your life insurance policy’s death benefit can help your loved ones pay for daily expenses, child care, future education costs, and more. The peace of mind you’ll gain from taking out a policy may be less expensive than you think, especially when you reach your 30s and may be thinking about starting a family or leaving a legacy for future generations.

For example, a $500,000, 20-year policy issued by MassMutual or its subsidiary CM Life to a healthy 30-year-old woman costs about $15 per month. That’s less than IPTV or two acai bowls for lunch. A 36-year-old man in excellent health can buy a 20-year term life insurance policy worth $750,000 for as little as $30 a month. Your prices will depend on a range of factors including your age and general health.

If you’re interested in knowing how much (or how little) your premiums will be, you can get a free life insurance quote online.

Plan your own future

Of course, you want to give your children everything. One of the smartest ways to provide a long-term financial legacy for them after you’re gone is to develop a solid retirement savings strategy.

Helping with your children’s education is a great goal, but there are no loans for retirement. If you don’t have a financial plan for your future, your children may have to provide for you one day. One of the greatest gifts you can give your children is freedom from future financial burden.

Look into your employer’s IRA or 401(k) offerings, if possible. Consider contributing at least enough to get the full match if offered.

You can also set up your own IRA, either traditional (tax deferred) or Roth (taxable now).

A sound retirement portfolio provides two benefits: (1) your ability to utilize the funds in your portfolio to meet your financial needs in retirement, and (2) if your children are the beneficiaries, the funds in your portfolio will be transferred to them if you die before using them. Working with a financial planner can help you find the best path for you.

Create a will

Everyone needs a will, especially parents. Not only does a Will designate the guardian you want to care for your children, but your Will also opens the door to having a valuable conversation with your loved ones. When you place your cards on the table, you will clear up confusion and clarify the things that have value to you.

The monetary values ​​of the items in your will are irrelevant. When you leave a vinyl record collection, a valuable guitar, or a stack of magazines to a child, you show how much you appreciate that person and trust them with the things you hold dear.

Build a legacy with charitable gifts

As you draft your will, you may want to consider charitable causes to which you may wish to bequeath assets. Although you may not have the means to make donations now, legacy gifts are greatly appreciated and keep your name alive far beyond your lifetime.

Naming charities in your will can also help family and friends know where to donate in your name in your honour. My mother was the president of the senior center in our town, and before she passed away she asked for donations to the center in lieu of condolence flowers. I love knowing that her memory lives on in a place that was so important to her, and whenever I pass the building, I feel connected to her in some small way.

If you’re interested in leaving a charitable gift, find out how to donate assets after your death to a charity, educational institution or non-profit organization and have the conversation now with your loved ones. Be clear about your intentions and write them in your will now.