Alamy Hey, dads: You know that “World’s Greatest Dad” T-shirt you sport every Father’s Day? Well, you deserve it! You not only work hard from 9 to 5 to provide your family with a good life, but also dutifully slog through your honey-do list and coach the Little League team.
In return for the love your kids will show you this Father’s Day, give back to your family by implementing these four financial planning musts.
1. Review Your Insurance.
It’s important that you maintain an appropriate amount of life insurance. That way if something happens to you, your family’s future financial needs — like living expenses and college costs — will be adequately covered.
Your employer may offer you life insurance as part of a group plan. Typically, the coverage you’re granted is either a flat dollar amount (like a $50,000 death benefit) or a multiple of your salary (say, three times your annual base salary). But that amount of coverage may not be enough for your family. If it isn’t, be sure to supplement with either a term or whole life policy.
Also, consider disability insurance. Again, your employer likely offers coverage up to a certain amount. But make sure it’s enough to fund your family’s needs in the event you can’t work for a while.
2. Designate a Guardian for Your Children.
Lots of parents get stuck when it comes to designating a guardian for their children should the worst happen and you become unable to raise them yourself. Parents often disagree about who would be best, and no one likes to think about someone else raising their kids.
But if you haven’t made your wishes clear, the court will appoint someone without any guidance from you. Most commonly, the courts choose a member of the family. But maybe you don’t want certain family members raising your children.
The best way to prevent this from happening is by sitting down with your spouse, hashing it out, and getting the paperwork done.
3. Review Your Beneficiary Designations.
Check your beneficiary designations annually. That might seem like overkill, but it’s a good habit to get into. You may have been so busy changing diapers that your sleep-deprived self forgot to add your 6-month-old’s name to your accounts.
Review your current designations and make sure they’re up-to-date. Remember to do so for all of your IRA accounts, 401(k) plans, and life insurance policies.
4. Save for College.
It’s never too soon to start saving for your kids’ college. With the average annual cost of an out-of-state public university education standing close to $34,000, it takes discipline and sacrifice to scrape together enough cash.
The best way to amass that money is with a tax-free 529 college savings plan. Withdrawals used for qualified higher-education expenses like tuition, books, and room and board are tax-free.
Some states allow you to deduct part of your contribution annually on your tax return. And 529 plans also give you the flexibility to switch beneficiaries, which is great if you find out one kid isn’t college material yet the other is Harvard bound.
Take time this Father’s Day weekend to kick back and relax with your family. But once the workweek rolls around, implement these personal financial planning essentials. You and your loved ones will be better off for it.
Nicole Seghetti is a frequent contributor to The Motley Fool.