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Just Like Your Home, Your Finances Need a Strong Foundation
When building a house in Dublin, Powell, or anywhere across Central Ohio, most people envision the wonderful life they’ll live there—holiday dinners, birthday parties, and growing old with loved ones. But none of that truly matters if the house isn’t built on a solid foundation.
The same holds true for your financial life.
A strong financial foundation is what allows you to confidently handle life’s inevitable storms—whether they’re unexpected expenses, job changes, or medical challenges—all while staying focused on your cherished long-term goals.
Here are the four core pillars of a stable financial foundation and how you can begin building them today.
Pillar 1 – Emergency Fund: Your Financial Storm Shelter
An emergency fund is your absolute first line of defense when things go sideways. Think of it as your personal financial “storm shelter,” ready to protect you when unexpected financial weather hits.
What It Is
An emergency fund is simply a cash reserve specifically set aside to cover 3–6 months of essential living expenses. It’s there for unforeseen events like:
- Job loss
- Medical emergencies
- Major car or home repairs (like a sudden furnace failure in a Worthington winter!)
Why It Matters
Life in Central Ohio, just like anywhere else, comes with its share of surprises. An emergency fund empowers you to absorb these financial shocks without:
- Piling up high-interest credit card debt.
- Being forced to disrupt your long-term investments (like selling stocks at a loss).
Pro Tip: Keep your emergency fund in a high-yield savings account. This ensures it’s safe, easily accessible, and earning a little extra while it waits.
Pillar 2 – Retirement Savings: Investing in Your Future Self
Retirement may feel like it’s decades away, but it has a funny way of sneaking up faster than you think. Starting early is one of the most powerful financial decisions you can make.
Start Now, Benefit Later
The sooner you begin saving for retirement, the more you benefit from the incredible power of compound growth. Even small, consistent contributions can grow into a substantial nest egg over time. Waiting for life to “settle down” often means missing out on years of potential growth.
Common Retirement Tools
Central Ohio offers various options to help you save:
- Employer-sponsored plans: Such as 401(k)s and 403(b)s. These are often the easiest way to save through payroll deductions.
- Individual options: Like a Traditional IRA or a Roth IRA, which offer different tax advantages.
Don’t forget the employer match! Many Central Ohio employers will match a portion of your contributions to your 401(k) or 403(b). This is literally free money you shouldn’t leave on the table!
How Much Should You Save?
A good starting rule of thumb is to aim to save at least 10% of your income towards retirement. However, the most important step is simply to begin, no matter how small the amount. Consistency is key.
Pillar 3 – Estate Planning: A Gift of Clarity for Your Loved Ones
Estate planning might not feel urgent right now, but it is one of the most thoughtful gifts you can give to your loved ones. It’s a vital component of long-term financial and family stability.
What It Includes
Comprehensive estate planning goes beyond just a will. It typically includes:
- A will or trust to dictate how your assets are distributed.
- Clear beneficiary designations for your financial accounts.
- Guardianship plans for any minor children.
- Health care directives (like a living will) and power of attorney documents to ensure your wishes are honored if you become incapacitated.
Why It Matters
Without a solid plan, the state of Ohio—not you—will decide how your assets are distributed after you’re gone. This can lead to:
- Public probate proceedings, which can be lengthy and expose private family matters.
- Significant delays in your loved ones accessing much-needed funds.
- Considerable emotional strain on your family during an already difficult time.
Added Protection
Utilizing tools like revocable trusts can offer additional benefits, such as privacy, avoiding probate, and providing crystal-clear instructions on how your affairs should be managed.
Pillar 4 – Insurance: Safeguarding Your Financial Progress
Insurance isn’t just about “checking a box” on a to-do list. It’s a critical layer of protection that safeguards your entire financial plan against unforeseen life events.
Types to Consider
To protect yourself and your family comprehensively, consider these essential types of insurance:
- Health Insurance: Crucial for covering medical costs, from routine check-ups to major emergencies.
- Disability Insurance: Protects your most valuable asset—your income—if you become unable to work due to illness or injury. The Social Security Administration estimates that 1 in 4 20-year-olds today will become disabled before retirement.
- Life Insurance: Provides essential financial support for your family if you pass away, helping them cover ongoing expenses, mortgages, and future goals.
- Umbrella Policy: Offers an extra layer of liability protection beyond what your home and auto policies typically cover, safeguarding your assets from large lawsuits.
Tip: Don’t just assume your employer’s insurance coverage is enough. Periodic reviews with a trusted financial advisor can help you identify any potential gaps in your coverage and ensure you’re adequately protected.
FAQs: Building a Financial Foundation
Q: Where should I start if I don’t have any of these in place?
A: Begin by focusing on your emergency fund and retirement savings. These are the most urgent and foundational building blocks that provide immediate stability and long-term growth potential.
Q: How often should I review my financial plan?
A: Aim to review your entire financial plan at least once a year. Additionally, make sure to review it whenever major life events occur, such as a marriage, a new job, the birth of a child, a home purchase, or a significant inheritance.
Q: Is estate planning only for the wealthy?
A: Not at all! Estate planning is essential for virtually everyone. If you own a home, have minor children, or simply care about how your assets are handled and who makes decisions on your behalf if you can’t, then estate planning is a crucial step for you.
Ready to Strengthen Your Financial Foundation?
Life is full of uncertainties, but your financial plan doesn’t have to be. Building a strong financial foundation brings incredible confidence, stability, and the freedom to truly enjoy the moments that matter most with your family.
At Keeler & Nadler Family Wealth, we help individuals and families across Dublin, Westerville, Hilliard, and all of Central Ohio build strong, personalized financial plans that are designed to last a lifetime.
Schedule your free financial consultation today and take the crucial first step toward achieving long-term financial stability and peace of mind.