But Some Payment Methods Might Be Better Than Others
A bucket list should contain all the things you want to complete or experience in your lifetime. While these lists are fun to make, the reality is, whether it’s hiking through the Amazon rainforest or taking a cruise for the first time, it’s going to take funds to complete each item.
Big or small, saving for these adventures and goals essential. Taking out a loan or tapping into existing savings, including 401k and life insurance policies can be viable options under the right circumstances. Be sure to take some of these things into consideration before you make those bucket list plans.
Set Up a Budget First
Before tapping into in any cash on hand or withdrawing funds from an account, see how much money you need to complete that item on the bucket list. Is it a trip to Paris? Find out when the best time of the year is to go and how much it’ll cost for food, lodging and other expenses. Going during the off-season can help shave away at expenses.
If each item on the list is costly, consider doing one thing a year to avoid depleting savings accounts. Be sensible about the travel budget; never sacrifice all existing funds or paying down credit card debt to fulfill your wish.
Using Pre-Designated Savings
One way to access funds to complete a bucket list wish is to withdraw from a savings account set up for leisure activities. A personal savings account or brokerage account is the best way to go because there’s often no harsh penalty to withdraw funds.
Keep in mind that when utilizing Roth or most traditional IRAs, there is a penalty for early withdrawal especially if taken out before retirement or age 59-1/2.
Withdrawal From a 401(k)
A 401(k) is a retirement account that is often matched and set up by an employer. There are penalties for early withdrawal from a 401(k) and the optimal time to access cash is often after retirement age and through restrictions set forth by the employer.
If you have other retirement accounts set up with better returns, withdrawing funds from a 401(k) to use the funds for things like travel and related expenses is a viable option.
Cashing out a Life Insurance Policy
Life insurance policies are broad and have different ranges and returns depending on the policy. Because it varies for each holder, it’s wise to talk with a lawyer or financial advisor before taking a cash out option.
Policyholders can face a huge loss when cashing out, especially if there’s no other life insurance policy in place. Be sure that assets are secured, the mortgage is paid off, final expenses are paid for and there is significant savings readily available before using a policy toward a bucket list wish.
What About Loans?
Taking on more debt is usually not a wise choice for something like a bucket list item. However, if you know you have a settlement or other payout coming in the near future, and the timing and pricing of the list item can’t be ignored, a short-term loan could help keep you from missing out.
A bucket list is one way to set some personal wishes and goals and fulfill them if possible. There are many ways to access funds to do it. Just be sure that there is enough left over to get through unforeseen emergencies and other life expenses first.
~Here’s to Your Financial Health!
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