You can still make good on that promise by doing a year-end review.

For the last few years Chantay Bridges has practiced the annual ritual of year-end planning. This time though, “The economy made this a necessity.”

In August, she sat not only with her pastor for spiritual advice, but with a financial planner. What topped the agenda? “Retirement. I have been concerned with the stock market and pensions being on a financial roller coaster. You have to make preparations ahead of time instead of hoping everything will fall together later on,” says Bridges, 35, a senior real estate specialist in Los Angeles.

Her meeting was fruitful. “I got a reminder of why it’s important to have your money working for you, a lesson on mutual funds, a report on the current gold and silver prices, and how to set up a financial plan that fits within our current and future lifestyle goals,” says Bridges, who is married and has a grown stepson. In addition to retirement planning, she reviewed her credit report, insurance policies, as well as her will.

At a time when it’s about the parties and festivities, it can be hard to focus on all things financial. But year-end financial planning should be just as much a tradition as mistletoe. To make the task seem less daunting, don’t even think about going it alone. Pull together a team of professionals to help you: a financial planner, tax adviser, insurance agent, and estate-planning attorney. Getting expert advice is less costly than you might think, and whatever you spend you’ll recoup in savings. Remember the three C’s: credentials, character, and chemistry. Here’s what you need to build a dream team that can help you ring in financial success next year and beyond.

Why You Need a Financial Planner
A financial planner can provide a comprehensive look at the past year and plot a path for the next one, not only for investments, but debt, taxes, life changes, and more. Look for someone with credentials, specifically the certified financial planner (CFP) designation, awarded by the Certified Financial Planner Board of Standards Inc. to those who meet education, examination, experience, and ethics requirements.

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Once you have a few candidates, ask questions. “Who is the planner’s typical client?” asks certified financial planner and chartered financial consultant Ivory Johnson, director of financial planning at Scarborough Capital Management Inc. in Annapolis, Maryland. “There’s nothing wrong with asking how they get paid, particularly in writing. Are they the subjects of any litigation or customer complaints? Read the finance section and form questions that professionals should be able to answer,” says Johnson.

Don’t simply choose someone based primarily on proximity. “Many people believe that proximity makes for a more comfortable relationship, only to discover that their process of picking an adviser was marginalized.” Another no-no: choosing whoever is cheapest, with little regard for competency. “You may pay the price in the currency of bad advice,” says Johnson.

Advisers are paid three ways: per hour, as a percent of assets under management, or commission. As a general rule, says Johnson, advisers charge from 1% to 1.5% of assets under management. To find a financial planner and for general information on financial planning, check out the websites of the National Association of Personal Financial Advisors, and the Certified Financial Planner Board of Standards.

Why You Need a CPA
A certified public accountant can help you with tax strategies. For example, should you donate to charity to lessen your tax burden? Would you benefit from increasing your 401(k) contributions for the rest of the year, or accelerating payments so that you get the credit for 2011, or deferring income to next year? A CPA might also determine that you could maximize tax benefits by matching stock losers and winners so you have no capital gains.

Meeting before the close of the year is important, too, when it comes to tax planning. Action steps taken before Dec. 31, can save you come tax time. When you’re looking for an accountant to add to your team, you want not only the CPA credential, but someone active in professional societies and who maintains continuing education requirements, and works with people in your income level and profession.

Ask how long they’ve been in business and where they worked previously. How much you will pay for a CPA’s advice depends on the scope of services you will need, but can start at $500 and go up from there, says certified public accountant Genevia Gee Fulbright, president of Fulbright & Fulbright, CPA in Durham, North Carolina. She suggests asking what the minimum fee is.

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“Sometimes unscrupulous individuals claim to have licenses and experience. It’s easy to check online lists with boards certifying professionals to see that the individual is licensed before you hire them,” says Gee Fulbright. A good place to start is the American Institute of CPAs , which can direct you to your state’s CPA society.

To prepare for the meeting, peruse prior records and come up with questions and concerns that you’ve had in the past. Ask the CPA what specifically you should bring.

Why You Need an Insurance Agent
A life insurance agent needs to know about any life changes that would impact the level and type of coverage needed. Significant life events include marriage, divorce, birth or adoption of a child, a considerable increase in income from a promotion or job change, or an increase in liabilities, due to major purchases such as a new car or home.

“Most people do their financial planning when a financial tragedy happens to one of their family members or someone they know,” says Kenneth J. Royster, senior financial planner and chartered life underwriter (CLU) with First Genesis of Virginia, an office of MetLife. Why wait?

You want to ask questions similar to those posed to other team members, as well as, “Will you be accessible when I have questions? What licenses do you hold? Where did you receive your training?” recommends Royster. You can check with your state department of insurance to see if they are licensed and whether there have been any problems with your prospective agent.

If you’re wondering how much insurance you might need and to learn more about the various types of insurance, the Life and Health Insurance Foundation for Education and www.lifeinsuranceindepth.com can get you on your way.

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Why You Need an Estate Planning Attorney
“As long as you are not dead, you need to do estate planning,” says Lori Anne Douglass, a partner with Moses and Singer L.L.P., specializing in estate planning. While nobody likes to contemplate their end, it will come. Choose to be financially ready. Estate planning isn’t only about transferring generational wealth, it’s about having your final say. Everybody needs a will.

“People don’t often realize how much their assets are worth,” she explains. It’s important to put assets in a trust because you can structure it with stipulations, such as how the money is to be used, or when. By making lifetime gifts, you remove not only the value of the asset gifted, but any subsequent appreciation on the asset, from your taxable estate. If, for example, you have a house currently worth $3 million, “you can make a gift of the house now, and if, upon your death in 20 years, the house is worth $10 million, you have removed that additional $7 million from your taxable estate.”

Douglass cautions, however, that one should never attempt to gift assets without first speaking to a qualified trusts and estates attorney because in addition to estate tax considerations there are gift tax, income tax, and other federal and state transfer tax consequences that must be taken into consideration. The cost of working with an estate attorney will vary depending on your location and estate planning needs. Some attorneys will charge an hourly rate or offer flat fee billing.

–By Karen Thomas

Identity theft claims more than 10 million victims annually in the U.S. alone, according to the Federal Trade Commission.

Even children are often subjected to identity theft, leading the FTC to recent warn parents about the increased risk of their kids being targeted during back-to-school season.

And just last week, authorities broke up the largest ever identity theft ring ever nabbed. Officials in the greater New York City area arrested more than 100 individuals and charged them with perpetrating at least $13 million in identity theft and credit card fraud on unsuspecting consumers.

Fortunately, there is a way to protect yourself and your family – in part, at least – from the financial sting of identity theft.

A handful of insurance companies nationwide offer identity theft coverage, including State Farm, Farmers, Allstate and Nationwide. The cost to buy this insurance ranges from about $25 to $100 a year and coverage usually goes up to around $25,000.

Since the average victim of identity theft spends about 200 hours and $1,000 cleaning up the mess brought on by this heinous crime, identity theft insurance reimburses you for a range of things like attorney’s fees, phone bills, and time lost from your job.

Also, some credit monitoring services also include identity theft insurance coverage.

How Big a Risk is ID Theft?

Buying any form of insurance is really all about the numbers. The same is true for life insurance, health insurance, car insurance, and yes, even identity theft insurance.

When you purchase insurance, you’re making a calculated decision. You’re betting, essentially, that a given peril (such as having a car accident or being victimized by identity theft) may in fact happen to you (although you’re hoping that it won’t).

The insurance company that sells you the insurance is making a bet too. They’re betting that the danger or peril in question won’t, in fact, happen to you (and they’re hoping it won’t also). At the very least, they’re hoping that a specific danger won’t happen to too many of their insured clients.

Despite the odds of something happening, insurance companies know that in any given year, for any type of insurance, they’re going to pay out a certain number of claims.

The two big questions really are: who will file a claim and how much of a payout will that person be seeking? When it comes to identity theft, it’s almost a crapshoot on that first question.

Identity Theft Can Strike Anyone – Even the Rich and Famous

Anyone can be struck by identity theft, from the anonymous “Average Joe” to well-known celebrities and very rich individuals. Some famous people who have been victims of identity theft include:

• Ben Bernanke, the chairman of the Federal Reserve Board
• Warren Buffett, the billionaire investor and head of Berkshire Hathaway
• Tommy Hilfiger, the clothing designer and fashion guru
• J.K. Rowling, the author of the Harry Potter book series
• Oprah Winfrey, the popular talk show host and media mogul
• Tiger Woods, the professional golf legend

The Odds Are You May Be Victimized Too

Clearly, identity theft is an equal opportunity hazard confronting us all. Concerning that second question, about how much in claims will be paid out, insurers have a bit more insight.

If the numbers on identity theft are to be believed, and current wisdom has it that about 10 million Americans succumb to identity theft each year, then that suggests the average person has a 3% chance of becoming an identity theft victim in any given year. So far, the “odds” work in the insurance company’s favor.

But when looking at those numbers over time, the numbers change exponentially. Those 3% odds grow dramatically each year, magnifying the likelihood of being struck by identity theft over a span of, say, 20 or 30 years.

In other words, the odds are actually fairly high that you will, at some point, be hit by identity theft. If and when it happens, that coverage could prove invaluable.

Getting Help in the Aftermath of Identity Theft

Hopefully, you’ll never be ensnared by the heinous crime of identity theft. If you are the victim of identity theft, however, act immediately.

Alert the credit bureaus so they can put a notice in your credit files. Notify your local police department, so that you have a record of the contact the Federal Trade Commission (877-ID-THEFT or www.ftc.gov), and seek help from the Identity Theft Resource Center (858-693-7935 or www.idtheftresource.org) in San Diego.

“Ask The Money Coach” is a syndicated column written by personal finance expert Lynnette Khalfani-Cox, co-founder of the free financial advice blog, AskTheMoneyCoach.com. Follow Lynnette on Twitter at @themoneycoach.

The Northwestern Mutual Life Insurance Co. Inc. (www.northwesternmutual.com) is one such insurer. Based in Milwaukee, Northwestern Mutual offers a variety of financial products and has roughly 2,000 openings for financial representatives and 2,500 internships per year. “We do this type of aggressive hiring just about every year,” says Gregory Jones, the company’s chief diversity officer.

The industry offers a variety of positions including insurance investigators, who handle questionable and fraudulent personal and business claims; auto damage appraisers, who inspect vehicular incidents; management analysts, who assess risks faced by insurers; underwriters, who evaluate applications to determine risk; and sales agents. An undergraduate degree is required for entry into the field. The good news is that most insurers provide position-specific and ongoing training. Agents selling financial products must meet state licensing requirements and pass the Series 6 or Series 7 licensing exam offered through the Financial Industry Regulatory Authority (www.finra.org).

Whether you’re applying for an internship or financial rep position, Jones says that his company looks for certain characteristics over career specifics. “We take applicants from all sorts of majors. We’ve had success with former engineers and lawyers. To be successful, our reps and interns have to be disciplined, good listeners, entrepreneurial minded, and able to build good relationships.”

Whether you’re single, married, divorced, or widowed, it’s vital to do a financial checkup regularly. Dr. Hughan Frederick and his wife, Nekeidra Frederick, understand the importance of staying on top of their finances. With two young sons—Hughan, age 3, and Caelen, age 18 months—the Fredericks know it’s important for them to keep track of every dollar they earn, spend, and save. “Doing a financial checkup pays off,” says Hughan, an obstetrician and gynecologist who has opened his own practice, Isis OB/GYN, in Alpharetta, Georgia. “We know where our money goes. We can account for it.”

Hughan and Nekeidra, ages 37 and 35, respectively, talk frequently with their financial planner, with whom they meet in person annually. They also meet with each other quarterly to discuss their budget and major purchases, and to set financial goals. “This economy has been a reminder that nothing is guaranteed,” says Nekeidra, who owns a public relations consulting business, Gunner Marketing Group. “We buy what we need instead of everything we want. We also review our finances to ensure that we are meeting our goals.” One of their goals is to make sure their sons are taken care of in the event that one or both of them should die. The couple has drafted wills and set up a 529 college savings plan for each child. They’re also vigilant about managing their credit, making sure to check their credit reports quarterly and pay off balances in full each month. During their annual financial checkup, the Fredericks make sure they’re on target with college savings, retirement, and insurance needs. They pay specific attention to whether they’re saving enough for college, whether their retirement accounts are properly diversified, and whether their insurance is adequate for their current stage in life.

Here are some guidelines to help you conduct your own financial checkup.

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CREDIT
Order your credit reports. Before you can conduct a credit checkup, you’ll need to order credit reports from each of the three major credit reporting agencies (Equifax, Experian, and TransUnion). You’ll be charged less than $20 for each report. Each year, you can order one free report from each bureau by visiting AnnualCreditReport.com (www.annualcredit report.com), so you can monitor your credit at no cost by ordering a report from one of the bureaus every four months. But for this end-of-year checkup,  it’s best to have all three reports. Adam Levin, chairman and founder of Credit.com, a consumer advocacy site, suggests that you ask yourself the following as you conduct your review: Am I keeping balances on my credit cards reasonable? Am I making payments on time?  Also be sure to check for errors. To correct any mistakes, write to the credit bureau and enclose copies—never originals—of any supporting documents, and ask for a correction or deletion.

Purchase your credit score. You can obtain your credit score for less than $20 from MyFICO.com. Many credit scores are available, and some lenders use their own scores, but the FICO score is the one most widely used by bankers and lenders. What’s a good score? John Ulzheimer, president of consumer education at Credit.com, says 700 used to be an excellent score, but it’s now considered average. “An elite score is now 750 or higher,” he says.

Monitor your credit utilization. Your credit utilization ratio makes up 30% of your FICO score. This ratio measures how much credit you’re using of the credit you have available. It’s best to use less than 10% of your available credit. Ulzheimer says, “Those with FICO scores of 760 or higher use just 7% of their available credit.” Having a lot of credit cards isn’t an issue, but using more than 10% of your available credit is. Once you have your credit report in hand, determine how much outstanding debt you have. Resolve to pay down as much of it as you can, because using too much of your available credit—even if you pay your bills on time—will lower your credit score. Most financial experts do not recommend closing credit card accounts, however.

Identify and change bad habits. All poor scores are not created equal. You could be missing payments, running up large credit card debts, applying for too many retail store cards, or all of the above. “Identify what you’re doing wrong and stop doing it,” says Levin. “Only then will your scores get to where you’d like them to be.”

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TAXES
Keep track of deductions and credits. Now is the time to prepare for filing your 2010 tax return. Because 2011 tax rates are expected to revert to pre-2001 rates, William Perez, an enrolled agent with Perez Tax Associates in San Francisco, advises planning this year’s taxes with an eye toward what may be higher tax rates in 2011. “You may want to accelerate income into 2010 to lock in a known tax rate now,” he says. “Similarly, you may want to defer any tax deductions until 2011, so they will offset next year’s income at presumably higher rates.” As this is likely the last year for energy-related tax credits, consider buying, if needed, energy-efficient appliances, or upgrading windows and doors, or making other energy saving moves, he advises. Life changes like getting married or having a baby can affect your taxes as well. Business owners or freelancers should also take into account any business-related expenses they can deduct.

Pay attention to changes in tax law.  If you’ve been preparing your own taxes you might want some help this year and next. “Some states are increasing tax rates for 2010 or reducing deductions,” says Perez, citing New York, New Jersey, Connecticut, and California. Many federal tax breaks and credits will expire this year. The top marginal income tax rate (for those with incomes above $200,000, or for married couples earning more than $250,000) is expected to revert from 35% to 39.6%; the top capital gains rate returns to 20% (affecting those same high earners); federal estate tax rates of up to 55% will return for net estates exceeding $1 million; and those in the 10% income bracket may go in to the 15%. More married couples may be affected by the so-called marriage penalty, in which some married taxpayers who file jointly may pay more in taxes than they would if they were single. Under the pre-2001 tax law, the penalty affected about 42% of couples, requiring them to pay an average of nearly $1,400 in additional taxes; however, about 51% received a tax bonus or a decrease in their tax bill, by an average of about $1,300.

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INSURANCE
Assess your needs. Are you properly protected? Do you have adequate life, health, home, car, and disability coverage? If you’re not sure how much life insurance you need, start by calculating what replacement income your family would need in the event of your death, says Michelle Oliver, president of the Oliver Financial Group, an independent insurance and financial services agency. Some financial planners recommend $1 million if you have minor children, but work with a fee-only planner to determine your family’s unique needs. To get an idea, use an online life insurance calculator like the one at Bankrate.com. As for what type to buy, weigh factors like affordability, your goals, your income, and your age. Most finance experts recommend term as the better option for most people. A 35-year-old nonsmoking man in very good health would pay around $60 a month for a $1 million, 20-year term policy, according to MetLife.

Don’t overpay. For example, if you purchase your own health insurance, make sure you’re not paying more than you need to for the coverage you actually use. According to eHealthInsurance.com, which sells health insurance online in all 50 states, the average monthly premium of policies it sold was $392 for families and $167 for individuals. (Premiums in New York and Massachusetts are much higher than the average.) Also, consider your utilization patterns over the past year. If you’re self-employed, you may be able to deduct health insurance premiums paid for yourself and your dependents as an “above the line” (without itemizing) business expense on your federal tax returns. Even if you’re not self-employed, if your qualifying medical expenses exceed 7.5% of your adjusted gross income, you may qualify to deduct expenses above that threshold. Before buying, discuss with a tax professional the tax implications of any health plan you’re considering.

Review existing insurance policies. Michael Kay, certified financial planner and president of Financial Focus L.L.C., offers a few questions for thought. Have you experienced any life changes that need to be reflected in your coverage, such as marriage, death, or birth? Are your health insurance deductibles too low? Can you lower your premiums by covering some risk yourself? Or, are your deductibles too high? They are if you don’t have the cash flow or savings to cover them. Also, don’t assume that employer-paid life insurance coverage is adequate; it typically equals just one year’s salary, hardly enough to keep your family going long term. Plus, if you lose your job you lose that life insurance. It’s a good idea to purchase your own policy and consider the employer-paid policy supplemental.

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ESTATE PLANNING
Start now. “As long as you’re not dead, there’s time to do estate planning,” says Lori Anne Douglass, a partner in the trusts and estates practice at the law firm of Moses & Singer in New York City. At a minimum, everyone should have a will and medical and financial directives in place. “Without a will, state law prevails,” says Douglass, and the state might not distribute your assets as you would like. What is most important: A will is the only place where parents of minor children can legally designate a guardian for them, Douglass notes.

Keep track of changes. The most significant news on the estate planning front is the expected rise in federal estate tax rates. Net estates that exceed $1 million in value may be taxed at the rate of 55%; only the first $1 million will be exempt. In 2009, the first $3.5 million was exempt. If the bar is lowered, many more people could be affected, says Douglass, who points out that $1 million isn’t hard to reach with real estate in the equation. “You need to know the federal and state laws and work with a lawyer who can help you plan for them,” says Douglass.

Take note of assets and changes. Identify assets that have increased significantly in value, and account for changes such as divorce or death that will affect your beneficiaries. Evaluate whether your estate documents are appropriate for where you are in your life now. If you expect to have assets valued at $1 million or more in 2011, have a financial professional do an estate tax analysis now to determine what your estate tax liability will be and to explore options for reducing or deferring it, advises Karen Lawrence-Webster, CPA, vice president and district manager with AXA Advisors.

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RETIREMENT PLANNING
Determine how much you’ll need. Generally, says Dawn Brown, a senior financial adviser with Altfest Personal Wealth Management, 10% of gross pay should be put aside for retirement, but much depends on your goals. Figure out an annual withdrawal rate of at least 4%, she adds, assuming a 60% equities and 40% fixed income portfolio. Don’t just guess how much you’ll need for retirement; tally your exact requirements annually using a retirement calculator such as the one at Bankrate.com.

Don’t underestimate your time horizon. You don’t want to risk running out of money during retirement. “Plan for a longer time horizon than your parents or grandparents,” says Barbara Walker-Green, personal wealth and retirement planning adviser with Advanced Wealth and Retirement Planning Concepts. Generally, the longer the time horizon for your investments, the more risk you’ll be able to take on. “Many people make the mistake of assuming too little risk because they focus on short-term volatility,” she says. “They may end up with portfolios that underperform and that keep them from reaching their goals.”

Maximize your employer-sponsored plan. Contribute at least the amount your employer will match. Make sure your portfolio is diversified among various types of investments and holdings and that the allocation fits your age, retirement goals, and time frame. Also, anticipate obstacles. “Think about significant changes that might occur in 2011, such as a child graduating, which may free up more cash. Or a teenager who will be driving and want a car, which may reduce how much you can save toward retirement,” advises Lisa Baskfield, a CPA and CEO of Baskfield and Associates CPAs.

SAVINGS
To keep your financial plan intact, you’ll need sufficient savings. Most financial planners recommend saving the equivalent of six to eight months of expenses. If you haven’t started building a cash cushion, now is the time. Make saving easier by having a set amount automatically deducted from your checking account regularly, or set up an automatic deposit into an online high-yield savings account from your paycheck. When an emergency occurs, this savings will keep you from maxing out your credit cards or raiding your 401(k).

Now that you know what to look for, start reviewing your finances. Conduct a thorough inventory, and commit to monitoring your progress as you go through 2011. By this time next year, you’ll be well on your way toward building wealth for you and your family.

–Additional reporting by Sheiresa Ngo

Unfortunately, this “set it and forget it” approach doesn’t fly when it comes to insurance. Whether you have life, health, automobile, homeowners, renters, boat, or business insurance, pull out that thick file once a year to make sure your coverage is still adequate. You’ll want to consider lifestyle changes that took place over the previous 12 months, and even ferret out some cost savings.

“Things change,” says Mark Pizzi, president and chief operating officer at Columbus, Ohio-based Nationwide Insurance. “Most people don’t realize how even minor changes in their daily lives can affect or be affected by their insurance coverage.” Finishing a new basement off in your home, for example, can increase the home’s value and, in turn, affect your homeowner’s insurance coverage. New additions to the family, marriage, and divorce can also influence health, life, and automobile insurance, and should be discussed with your agent if they occur.

Cost Savings Lost
Ignoring your annual insurance checkup may prevent you from saving money. Insurance is a highly competitive industry in which companies are always developing incentives to attract new customers. It’s worth having an annual conversation with your agent to make sure you’re up to speed on offerings. Take the vanishing deductible, for example. Introduced by Nationwide earlier this year, the program drops your deductible $100 for each year of safe driving. Allstate has a similar discount for drivers who have had no accidents or violations in the past five years. These are optional features that the typical customer may not be aware of—unless he or she saw the commercials on television, or talked to an agent.

Ideally, your agent (or agents, if you work with multiple companies) will conduct the annual review and pick up on any discrepancies, changes, or cost-savings opportunities you’re eligible for. If you don’t hear from your agent, pick up the phone and ask for a thorough review.

It’s a simple process but far too many people don’t think about it until they have a claim. That’s when they find out something wasn’t covered. To avoid this trap, educate yourself about your current policy and how to add or remove coverage based on your individual needs.

Shopping Around
Joel J. Ohman, a certified financial planner and founder of InsuranceProviders.com in Tampa, Florida, says annual insurance reviews can also ward off “sticker shock” that occurs when that quarterly, biannual, or annual premium invoice arrives. “If you’re confused by the higher rate, ask your agent about it,” says Ohman. “If you’re not satisfied with the reason, start shopping around.”

Taking a proactive approach to your annual insurance review provides peace of mind. The exercise can also save you money—do you really need personal property coverage for that diamond jewelry you sold two years ago?—and prompt you to shop around for better options.

“In any given year, we’ve found that 40% of our customers benefit in some way, adding more coverage, requiring less coverage, etc., from an annual review of their policies,” says Pizzi. “That translates into a significant number of consumers who would win by having their agents spend some time with their policies every 12 months.”

Hunter admires the fact that his father always helped people in need. He was a man who invested in his community and in his family’s “spiritual and mental banks,” but unfortunately “the financial bank remained empty,” says Hunter who was 27 when his father died. “Out of all the money made and good work that my father had done throughout his life, there wasn’t even enough funds available to put him in the ground.

Estate and insurance planning is not just for the wealthy or the elderly. It is for anyone who wants control of where his or her assets end up. But 35 million households have no life insurance coverage, according to a 2010 Trends in Life Insurance Ownership study conducted by research firm LIMRA. With individual life insurance at a 50-year low, four in 10 U.S. households with children would have immediate trouble paying bills if the main breadwinner died today.

As the eldest son of 14 children, Hunter—now the father of eight—is making sure he leaves behind not just enough money to cover burial expenses but an inheritance that will expand over generations to come.

The 34-year-old is principal and executive vice president of International Strategies and Operations at GeniusCo, an Atlanta-based IT management and services company that made $8 million in revenues in 2009. When it was time to choose a life insurance policy it was important that he and his wife, Aliyyah, 36, purchase a plan with adequate coverage that was also affordable.

Hunter identified four main items that the policy should contain. His first objective was to estimate the family’s life insurance needs. “We had to determine how much we could afford and how much we would need for either of us to maintain our lifestyle after the other spouse was gone,” he explains. Hunter factored in three years of his earnings, figured out how much he would owe if he died tomorrow, and included his wife’s and children’s living expenses.

Next, Hunter checked the longevity and consistency of life insurance companies, visiting their websites and paying special attention to each company’s board of directors and top management. He also investigated whether the insurer consistently paid out dividends.

Hunter then gauged the flexibility of several plans. He was interested in a plan that would allow him to borrow against it before retirement age without incurring fees and penalties. Lastly, he searched for a policy that would protect him if he were injured on the job. For example, some insurers offer a disability waiver premium, which ensures that insurance coverage is not lost when the policy owner is unable to pay premiums due to a total disability.

All the research guided the Hunters to a 15-year custom whole life insurance policy with New York Life Insurance. Here’s how it works. A portion of the premium goes into an investment account and accrues cash value allowing the policyholder to invest in bonds, money market accounts, and stocks. You can also borrow against the cash value of your policy.

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Although Hunter and his wife have a combined coverage of nearly $2 million in cash value, it was equally important that he create a long-term financial strategy for his children: Jasirah, Muhyideen, Maryum, Zulaikah, Inshirah, Layan, Umar, and Marwa.

While choosing a policy for children can be a difficult decision the Hunters felt it was the best choice. Each of his children has coverage worth $750,000 in cash value, which costs him about $700 a month. Although an expensive and unconventional choice it’s one that Hunter, who makes an annual salary of $250,000 a year, insists on. He says his children can tap into the policy’s cash value through the use of either a policy loan or by cancelling the policy and using the funds for retirement income, college tuition, a down payment on a home, or for emergencies.

“I now live with a level of security that I never had and it feels great,” says Hunter. “I am confident that if I were to leave this earth tomorrow, my goals could be accomplished and my family will be secure.”

HUNTER’S ADVICE
Hunter did extensive research before he found a plan suitable for his family. Here are some tips to keep in mind.

• Create a policy tailored for you. Some insurance providers allow policyholders to add “riders”—an additional set of terms and conditions that “rides on” the basic package. For example, the Hunters added a disability waiver to ensure that all future premiums would be waived and the policy would keep them insured if they were to become totally disabled.

• Compare policies. “Insurance policies look alike from the outside but there are little features that make them different,” says Hunter. Ask yourself, “What happens if I get sick?” “If I make a withdrawal and repay the policy back by the end of the year will I suffer a penalty?” “Will I still get dividends for the whole year even after the withdrawal?” Hunter says, “Some stuff is obvious, but when you compare apples to apples you have to split them down the middle and see which one has a little bit of rot in it.”

• Estimate your insurance needs. “We had to determine how much we could afford and how much we needed for either of us to maintain our lifestyle after the other spouse was gone,” explains Hunter. This calculation included Hunter’s salary for the next three to five years, funeral expenses, the cost of operating his business, and overall financial obligations such as the mortgage, debt, estate taxes, etc. (See “The Meaning of Life Insurance,” Moneywise, September 2010).

Tisdale offers advice for the newly single.

Divorce can be a drain on not only your emotions, but your finances as well. Whether it’s the housewife who had very little to do with paying bills or the husband who now has to pay support to a former wife and kids, a split from a spouse can mean major lifestyle changes.

Stacey F. Tisdale, money expert  and author of The True Cost of Happiness:  The Real Story Behind Managing Your Money ($25.95; John Wiley & Sons) offers these tips to get your financial house in order after becoming newly single:

• Be sure you’re single. If you have your name on shared accounts, get them adjusted. Contact your financial institutions, such as your bank and credit card companies, about separating the accounts or getting single accounts. You and your spouse are going to have to get on same page with this, Tisdale says. A divorce lawyer or financial adviser should be able to help guide you in this process.

• Identify your ex’s money role and prepare yourself to assume it. For example, if your now ex was the breadwinner and sole provider, you will now have to make arrangements to become the sole provider for yourself and your household.

• Be aware of how your financial situation is changing. Is there a settlement that you are paying or receiving that will change your monthly income? Are you paying additional money in child support or alimony? Determine how these changes affect your bottom line and adjust your budget accordingly.

• Go back to the basics of budgeting. Connect with your values and what’s important to you when it comes to your spending. Create a spending plan based on your money coming in, your priority expenses, and track how you’ve been spending your money.

• Ask yourself the following questions when examining your spending:

• Can I afford this?

• Is it in line with my goals?

• If not, why am I doing it?

• Change your beneficiary for your will, trust, and other estate documents if it was a spouse. “Many people forget this once they become newly single,” Tisdale says. “Probably the last thing you’d want is for your ex to get everything you’ve saved for the future.”

• Look into your health insurance coverage options. If you have coverage available through your job, utilize it. Under COBRA, you’re guaranteed 18 months of health coverage. Research on the Internet on how your coverage is affected as a now single person.

• Get a copy of your credit report. Even while the divorce is finalizing, get a copy to make sure there are no inaccuracies.

• Make sure that child support and education contributions are planned. Be sure you and your ex have a plan for how things will be paid for. That should be part of your divorce settlementAlways remember: You’re divorcing your spouse, not your children. Separate your financial lives, with the exception of children, says Tisdale, who is a proponent of joint financial responsibility for covering childcare expenses.

Just because you're single doesn't mean you don't need an estate plan.

When most people think of estate plans, what usually comes to mind are wealthy families with lineages littered with lots of old money. But you don’t have to be wealthy or married with a house on the hill to have a need for an estate plan.

“Every single person needs an estate plan,” says Valerie Coleman Morris, former CNN business anchor and author of Mind Over Money Matters (Sterling & Ross). If you own a home, car, or anything considered an asset, an estate plan would detail how those things would be allotted and to whom. “The average person has more of value that they care about that they won’t know unless they take an accounting of it,” she says.

Money expert and former CNN anchor Valerie Morris

In particular, if you’re a single parent, an estate plan can detail plans for your children in the case that something happens to you, whether it’s where your children will live or what valuables of your’s will go to whom. If there are no provisions in place, these decisions are left up to the state where you live in accordance with intestate succession.

Here are the basics of setting up an estate plan:

Understand the components: It includes elements such as a will, which details how aspects of your estate will be handled upon your death; a living will, which details what actions should be taken for your health in case of an illness or incapacitation; a power of attorney assignment, which gives someone authorization to act on your behalf in a legal or business matter; and a health-care proxy (or medical power of attorney). Also a trust, which allows you to put conditions on how and when your assets will be distributed, may also be included.

Organize a list of your assets and detail plans for them upon your death: “Assets are more than just dollars and cents… It could be a piece of jewelry that you have that was passed to you or a painting that has value to you,” says Coleman Morris. Other assets include investments, retirement savings, insurance policies, and real estate or other business interests.

Gather and keep on file the proper documentation. These include documents listing power of attorney, health-care proxy, and life insurance policies. Also, some documents, such as your will, must be notarized.

Review your plan on a regular basis. Life changes such as marriage, divorce, income increase or decrease, or birth of a child can change your estate plan needs. You’ll need to adjust accordingly.

Get a professional to help. Estate planning attorneys have knowledge on elements of an estate plan such as taxes, trusts, and beneficiary designations. They can best help to properly guide you through the process.

Further Reading: To Save and Protect

Set an emergency fund aside for unexpected expenses such as replacing junior's broken glasses or doctor's visits.

Managing household finances can be difficult for parents carrying the responsibility alone. Whether it’s a baby requiring diapers, formula, and frequent doctor visits or a teen who’s part of the back-to-school population and into top-of-the-line (aka expensive) technology, affording the basics can be an overwhelming challenge for single parents in a tight economy.

Carla Cargle, financial adviser and founder of Genesis One Wealth Builders in Sugar Land, Texas, offers these money management basics to single parents trying to properly manage their finances:

• Make and follow a sound budget or spending plan. Honestly examine your spending patterns, expenses, and income and be diligent with a plan of action for managing your money. “They need to have a household budget that they follow to make sure all the essentials are taken care of first and foremost,” Cargle says.

Don’t know where to start? Cargle recommends tracking the way you spend your money for at least two weeks and categorizing the expenses (e.g., food, clothes, movies). Then decide on the best spending plan for your income and identify where you can make adjustments. Put necessities first, then incorporate any extras.

• Get the right insurance coverage. This includes having proper health and life insurance coverage for yourself and your children. If you’re a homeowner or renter, invest in insurance to cover unexpected expenses or loss. “You never know what could occur so you should be prepared for anything,” says Cargle.

• Have an emergency fund set aside, separate from your usual savings account. With the advent of savings accounts serving as overdraft protection, having a separate account just for emergencies is a good idea. Look into opening a money market account where the funds aren’t as easily accessible.  “If it’s outside of your immediate access then you are less likely to tap into it,” she says. There are several money markets that don’t have minimum balance requirements. But if you’re interested in one that does, “start a savings account at your bank or credit union and then transfer that money into the money market account when you’re ready,” suggests Cargle.

• Learn to say no to your children when it comes to spending. Oftentimes, 0verspending and not saying no to extras can contribute to parental debt. Don’t overindulge, put an allowance in place, and stick to your budget, Cargle says. “At some point, the child has to learn these things so that they can become responsible with money as adults.”
  

• Start a savings plan for your children’s future. In addition to looking into options such as the 529 College Saving Plan, flexible spending account (FSA) or Uniform Gift to Minors Act (UGMA) account, start looking into scholarships, grants, and other ways to fund education early. “Don’t wait until a child is a senior in high school before you start saving for college or educational pursuits,” Cargle says. Determine your child’s aptitudes, develop a portfolio of information on how to nurture them, and find ways to start saving to support their development.