Americans have largely taken strides to get their finances on track this year by paying down credit card debt, limiting their use of borrowed funds and contributing more money to savings. While these actions can greatly enhance a person’s financial profile and put them in a more secure position, there are several other overlooked behaviors that are also important to a strong profile.
In many cases, people fail to complete other important and fast tasks that could have significant ramifications on their futures and those of their loved ones. Consumers Report recently unveiled several blunders that many consumers make each year that should be corrected and avoided in the future.
For example, the study showed that 86 percent of people failed to update wills and beneficiary information within the past five years. As a general rule, individuals should get in the habit of updating this data each time they undergo a life change. This includes marriages, divorces, births, deaths, a shift in income and other events that impact a person’s finances. Otherwise, outdated documents may not reflect a person’s true wishes when it’s time to distribute the terms of their estate. In addition to making updates, the study showed that only 30 percent of people speak to their family members about these documents and their last wishes. Families who do not know how to locate crucial financial or insurance information at key moments may spend a great deal of energy in an already stressful time trying to locate it.
Few Americans are planning ahead for the unexpected
The study also found that many Americans were not sufficiently planning for their futures by purchasing insurance or putting money aside for emergencies. More than 70 percent of respondents said they do not have an emergency fund that is large enough to cover more than three to six months of basic living expenses. In addition to having enough money on hand to cover emergency expenses, another 77 percent said they have not secured important financial documents in the event of a crisis.
When it comes to protecting their most valuable asset – their homes – only 36 percent of people said they purchased extended homeowners coverage, while 20 percent also said they carried an umbrella policy to protect them from liability.