Do you ever sit down and think about the legacy you are leaving behind for your children and family? And if you chose not to have any kids, have you thought about the legacy you want to leave once you’re gone that people will never forget you by?
As women in general, we outlive men by 4 to 4.5 years. And we are nowhere near being financially prepared for the long years, especially for our children’s lives. This can get fixed by preparing for the future with investments and savings and a life cover benefit.
What plans do you have in place for your loved ones? Let’s look at a few ways you can prepare for your future selves, as well as your family’s.
Financial Planning for you and your loved ones
Step 1: What Can You Save?
Before you begin planning your legacy, you need to assess where you are financially. Determine what cash you have each month after you have written down your monthly income and expenses.
By having an idea about how much you have available to set aside towards saving and investing, you can begin your financial journey.
Make sure to account for an emergency fund that does not constitute investments, as this will help you when you have those unexpected emergencies arise.
Goal Setting
Step 2: Set Goals
Now that you know how much you can put towards investing, you need to set goals. Will your money get invested only, or do you want to leave behind money for your children or grandchildren? If you’ve chosen not to have any kids, have you felt drawn to leave a sizeable amount for a charity you love?
Remember to include your retirement years in your goal setting. As a woman, you want to control your finances and be financially independent, not having to rely on others to take care of you once you’re retired and unable to work.
Write these goals down to see your plans and how much you will contribute to each goal.
Singapore Dollars
Step 3: Wealth Preservation
Leaving a financial legacy behind will consist of a mixture of assets. Here are a few of the most common assets that you can consider leaving behind:
1. Cash
Leaving cash behind can be both beneficial, as well as a risk. Leaving behind large sums of money could encourage your beneficiaries to spend through their inheritance faster, resulting in poor money habits.
2. Investments
With an investment, you are investing a capital amount where it generates a return annually. The longer you leave the money invested, the more your initial investment will grow.
You need to think about the age of the person you decide to leave the investment to, as it can get tricky if they’re young. A young beneficiary might not be mature enough to look after a large sum of money and cause them stress.
3. Property
Real estate is a widespread legacy to leave behind, as property ownership in Singapore is high. Leaving property behind can generate an income stream for your beneficiaries from rental income and potential capital appreciation.
Property is a great way to preserve wealth and can even enhance the wealth that’s left behind. There are risks to consider, such as:
- How will your beneficiaries share the property?
- If there’s no rental income, your beneficiaries will possibly get left with a mortgage to pay and will need to consider maintenance costs.
Protection for your family
Step 4: Term or Whole Life Insurance
As we know, life in Singapore is not cheap. Leaving a legacy behind can ensure your dependents are well taken care of. One way of doing this is by having a life insurance policy to leave for your loved ones.
Both insurances can cover you for death, total permanent disability, terminal illness, and critical illness.
A term life insurance protects you until the term, or specific age is reached. If the term or age gets reached, there is no payout. The primary purpose of term life insurance is protection only. A term life insurance is a more affordable option.
Whole life insurance protects you for your entire life until your death, or age 99. Whole life insurance is the more expensive option.
Both term life insurance and whole life insurance pay out for the same events but differ in the coverage term. You will need to determine the best choice for your situation.
Consider if your children will be adults when you are at the age of 65 years, and your mortgage and debt are all paid. If this is the case, then it might be best to take term life insurance.
But, if you want to leave a legacy to your grandchildren to take of their schooling and whatever needs they may have, or your mortgage is not yet paid, then consider the whole life insurance.
Preparing a Will
Step 5: Get a Will in Place
A Will is a legally binding document which determines how to distribute your assets upon your death. A lawyer can help you get your Will done and help guide you to make the best decisions.
A Will can also prevent any disputes amongst your beneficiaries, as they will know your final wishes precisely.
Family of 5
It’s a significant decision when you start planning for your legacy. Sit down with your husband to talk about what you want to leave behind for your loved ones.
Take into account the ages of all your dependents and beneficiaries so that you can plan correctly. If you are uncertain about which direction to go, speak to a financial advisor who has experience in these types of decisions.
Building a legacy to leave behind can change the lives of everyone you include in your Will, life insurance policies, and investments. They will remember you for how much you cared for them and how you set them up for the future.
About Michelle Lee
Michelle Lee is the founder of Legacy Edge. Michelle’s mission is to empower women to start investing safely and build passive incomes. She is a certified Associate Estate Planner as well as an Associate Financial Planner with certification in Securities. She was featured as one of The Straits Times Generation Grit 2020 nominees for inspiring others with her resilience and heart for the community, Michelle’s mission is to empower women to achieve financial wellness. Her accolades include the Court of the Table (COT) which represents the top 3% of financial advisors worldwide. Armed with more 10 years of expertise she can give you more clarity and confidence in your investment journey. She advocates investing with an end in mind, together with proper estate planning, she will ensure that your money rests in good hands eventually.