You Can’t Be Financially Secure Without These 10 Products

Remember Murphy’s Law? Make your finances rock solid with these 10 financial products.


Being money smart is about more than having a budget and eliminating dumb purchases. It means creating a financial foundation that will carry your family comfortably through whatever life throws your way.

To create that foundation and find lasting financial security, you need to own these 10 products. (Hint: You’re about to hear a lot about insurance.)

1. Checking account

Let’s start with the basics. You need to have a centralized place to manage and monitor your money. After all, it’s hard to have a balanced budget if you have only a hazy idea of where your money is going.

Prepaid cards are an increasingly popular option, but they can come saddled with a lot of fees. Plus, disclosures for these cards can be spotty, making it hard to know exactly how much your card is costing you.

Instead, look for a free checking account. Many institutions have scaled back their offerings, but there are still ways to get free checking from a bank or credit union.

2. Debit card

Along with your checking account, sign up for a debit card. Make sure it has a Visa or MasterCard logo and can be used like a credit card.

Having a debit card can eliminate your need to go into debt for purchases, particularly those where it is impossible to use cash or a check. Although I know that some people are fans of credit cards, my personal experience has shown the temptation to overspend when buying on credit negates card benefits for many people.

If you can’t bear the thought of giving up your credit card rewards, look for a bank that offers a debit card rewards program. After backing away from such programs, many banks have brought them back.

3. High-yield savings account

Every household should have an emergency fund; it’s your own personal form of insurance.

Typically, you’ll want your fund to be large enough to pay at least three to six months’ worth of expenses. Since that can be a fairly significant amount of money, you don’t want the cash languishing in a typical savings account, where it will earn next to nothing.

Savings rates aren’t great right now, but if you park money in an online account or a money market account, you may be able to yield close to 1 percent on your emergency fund.

4. Health insurance

Health care services can come with an enormous price tag, especially if you develop a serious health condition.

You may think you’re healthy and young, but robust people get in car accidents, or can be struck down by devastating illnesses. Unless you’re worth millions and can easily pay your own bills, going without health insurance is just plain dumb.

And remember, the law now requires most Americans to purchase health insurance.

5. Homeowners or renters insurance

If your home burns down, will you be left on the street?

Unfortunately, that’s what happens to some people who fail to insure their property. Homeowners policies are relatively inexpensive for the coverage they provide, so there is no reason not to own one.

These policies pay to rebuild your house in the event of a total loss. They also give you the funding to repair storm damage and vandalism, and will likely pony up the dollars needed for temporary housing in the event you can’t stay in your home during repairs.

However, don’t expect your policy to cover damage from flooding. You’ll need a separate policy for that.

If you’re renting, don’t think your landlord’s homeowners policy will pay for your stuff. Instead, cover yourself with some cheap renters insurance.

6. Auto insurance

A car may be your most valuable asset aside from your home.

While many states require you to carry at least a minimal level of coverage, you may want to consider more, depending on your assets and income. See “How Much Car Insurance Should You Buy?” from partner site CarInsurance.com.

For more information on how to get the coverage you need at a price you can afford, we’ve put together 10 tips to cut car insurance costs.

7. Disability insurance

Disability insurance can trip up some otherwise money-savvy individuals.

Disability insurance provides money in the event you are unable to work for an extended period of time. The details may vary by policy, but most generally provide payments equal to 60 percent of your gross income.

If you’re on the fence about whether to buy disability insurance, consider whether you have a big enough emergency fund to pay the bills if you are unable to work. Social Security disability payments provide benefits if you are unable to work for at least a year or are terminally ill. But even if you’re approved, there is a six-month waiting period before benefits begin.

Disability plans are often offered through voluntary workplace benefit programs, or you can purchase coverage directly from insurance companies. For more information, read Stacy Johnson’s primer on disability insurance.

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Comments

  • Terry Sanders

    Item number 3 was a real laugh: “High-Yield Savings Account”. In what universe that people who read these columns come from, does 1% amount to a “High-Yield”? That would mean my 10 million dollars would provide me with 100 thousand a year! And no doubt, readers of MoneyTalk have at least 5 to 10 million dollars casually laying in offshore accounts.

    If the author didn’t think he was joking, he should reassess his perception.

    And from item no.9: “make sure you have another source of income for your golden years”. That’s almost as wise as the recent suggestion to cure all poverty that issued fourth recently from one of those imbecile-savant billionaires: “If you’re poor, just make more money.”

    • Debbie Chen

      LOL yeah. Tell me about it… High yield savings account? You won’t be able to get any good interest %. Maybe 0.1%… better off just keeping it in a savings account. Even if the avg reader here has $30k in the bank, they would only make pennies off the current rates.

      Also, why would you use a debit card over a credit card? Assuming you are not dumb and pay it off in full every month, the credit card offers more protection and rewards. The debit card does not. I’ll use my credit card 100/100 times over the debit card. The only thing debit cards are good for is withdrawing money at ATM’s, or getting cash back on purchases at a 711 (when no non-fee ATM’s are available).

      For auto insurance, you don’t need anything but the required amount by law in your state (unless you live in NH, then I’d get a little more). A $25/month policy from Insurance Panda is more than enough for whatever you need. Anything more will just put extra $$$ in the hands of the insurers.

      Life insurance isn’t necessary if you save wisely. Same thing with retirement fund, disability insurance, and college savings account.

      You can tell this article was written by a “financial adviser” because the only person who stands to gain from this advice is somebody who hawks life insurance, annuities, retirement investments, etc. The only money advice the average person needs (in America) is: live within your means and save as much as you can.

    • Jason

      1% is high-yield compared to the 0.15% my credit union is offering. That is why we have moved our emergency 6 months of expenses out of our credit union and into I-Bonds.

      It is wise to have savings outside of social security for retirement. That is what the author is referring to when she says that is important to have another source of income. Income from investments, retirement accounts, savings, etc. Someone that relies solely on social security for retirement will spend their final years in poverty.

      • Issabella Paris

        I found a CD online that pays in excess of 1%, so I parked some funds there, making sure I wouldn’t need to withdraw before it matures.
        About saving early: I share with younger workers how important it is to find $10, $20, $50 a month…basically anything, and get savings started specifically for retirement only. I struggled for many years, but started (late, by most standards,) with $10 per paycheck. Seeing what you’ve accomplished after a couple of months or years is very satisfying, its own reward.

  • Patrick Seitz

    Great list, but I disagree in part on number 2. For me personally, using credit cards instead of debit cards is preferable not just because of the rewards points but because of the security. Anecdotally, I’ve heard time and time again of friends and colleagues whose debit card information was stolen by an identity thief and it taking several weeks before the bank returned the funds to them, or the hassles caused by holds placed by hotels or car rentals that prevented them from making other purchases with their own money. I’ve had to contest a few charges on credit cards before, which was quick and painless, but also not such a big deal because it was the bank’s money on the line and not mine.

    • Jason

      I agree. I have a debit card but I use it on the rare occasion I need to get cash from an ATM not for normal purchases. I’ve had fraudulent charges on my credit card once. Chase only let one fraudulent charge go through, declined several others and contacted me immediately. I had a new card the next day.

      It is also possible to go into debt with a debit card. It is rather easy to go shopping one afternoon, rack up 5-6 overdraft fees due to the way the bank structured your transactions, and owe $150-$200 in fees.

  • Dave G

    The list is a good one, but the discussion of debit cards should say “you can pass on this suggestion if you are that rare person who has not paid any interest on a credit card in (say) 2 years”. Actually, speaking for my wife and myself, we have paid none in the past twenty years. It’s perfectly doable……..

    • Jason

      I don’t use my debit card to pay for purchases. My money is deposited by direct deposit or online and I withdraw money from an ATM using my debit card. I see no reason to physically visit my Credit Union.

    • Not only doable, but actually done by about 40 percent of all credit card users. I think this constant harping on the theme that no one should ever use a credit card, because it’s literally impossible to control your spending with them, is just ridiculous. If I’ve never carried a balance in the twenty years I’ve had my card, why should I suddenly trade it in for a debit card (and the weaker consumer protections it carries)?

      • Dave G

        Since we agree, you must be right :). Seriously, I didn’t know that 40% number – it’s more than I would have guessed (probably because of the “constant [negative] harping” you mentioned) …..

  • chris brown

    Are college savings plans FDIC insured? From what I read online you can lose the $$ you invested if the market tanks. Is this true? Why would I not just put it in a savings account?

    • Anonymous

      The 529 plan I have for my child is not FDIC insured. It is subject to market fluctuations. That said, it has grown more in value following the market than it would have in a savings account at less than 1%. It’s a gamble, just like a 401k or IRA. But for long term savings it’s a better return. With post secondary costs rising at the ridiculous rate they are, it’s worth taking on some risk.(imho)

  • Jason

    I agree with most except disability and life insurance. At some time in a persons life they should have these but they don’t need them for their entire life. Life insurance and Disability insurance are important to have when you are young and don’t have a lot of savings. As one gets older, saving should increase until life insurance is no longer required. A 20 or 30 year term policy purchased in one’s 20’s should work for most people. Yes, their are estate planning advantages to life insurance but the average family doesn’t have a large enough estate to work about that.

    The same goes for disability insurance. More important than life insurance when someone is young but something that you should grow out of.

    • Not to mention, why do I need to be covered by a life insurance policy if my husband isn’t actually dependent on my income?

  • Good article. We have to disagree with a few:

    – Renters insurance: if you have so much stuff as renter that you feel the need to insure it, you probably have too much crap and should look into selling some of it. These should free up some cash that you can then invest, along with the savings from not paying the premium anymore.
    – Auto insurance: if you have a car so expensive that you could not replace it with cash, you are driving a car that is too expensive for you. This ties up a good chunk of cash that could be put to better use. If this is the case, sell your car and buy one that is more affordable so that you only need liability insurance. So you can also put the insurance monthly savings to work.
    – If nobody TRULY depends on you economically, this is a total waste of money.

  • LagunaLady27

    These are all important at one point or another in life. I had them all. But I am retired now and have grown children. I do not have or need disability insurance, a college fund or life insurance. So this money now goes into my “just have fun” account.

    • SuzieQ

      I am where you are and only need 7 out of 10 as well.

    • Don’t forget Long-Term Care insurance! I have two years of it. I’ve told my children that, if that insurance runs out, they should pull the plug!

      • LagunaLady27

        I have seen too many of these companies fail, leaving people high and dry. I also have seen premiums go up by 85%, no kidding. Then, there is the waiting period. So instead, I’m putting away $1K each month into savings. Add that to my pension each month, there’s enough to pay for such care.

  • Marie Lee

    Social security should be in addition to pensions, etc. So WHY is it that if you worked for the federal government & get a pension, you cannot collect SS or you collect a minimum amount of SS? They call it ” double-dipping” but if a person has worked enough time under both, they should be able to collect the max amount due on both! Very unfair law!

    • SuzieQ

      It may be that you did not pay in to SS and you did pay in to the government pension program. That is what I was told.

      • Marie Lee

        Paid into both totally. Collecting government pension & way reduced SS due to pension. As I stated, law states cannot “double-dip.” If paid into both, should be able to collect max amount on both!

        • LagunaLady27

          This is the case in about 25% of the states in our country. I too paid into both systems all my working life. It was required. Why then are they not required to pay me what it shows on their own charts? They keep 2/3 of my social security money. Not fair!

          • Georgia Wessling

            This is very strange. I worked for the federal government for 2 years. I got every cent back that I had paid in. If I had worked for 3 years, I would have gotten what the government added also. This was in 1964. At that time I did not pay into SS because the fed wouldn’t allow it. They would only allow their pension fund. Later, they dropped federal pensions and everyone had to go on SS. How can you have worked 20 years on federal and got a pension and SS? I can see you having a 401k. When did all this change?

          • LagunaLady27

            It all depends upon which state you live in. The rules in many take away 2/3 of earned social security payments if someone has a pension from any governmental agency, despite having been required to pay into both while working.

          • Georgia Wessling

            Actually, I get SS and 2 state pensions (1 is my husband’s, deceased) and in MO, I pay some federal taxes, but no state taxes. I get all my money back each year at tax time. MO must be a good state to live in. But – the question I was asking was how you could work for the fed and still contribute to a federal pension and SS. I was told, when they switched to SS, that the fed no longer had a pension plan. Is that true or do they allow both now?

          • Marie Lee

            Never allowed both.

          • LagunaLady27

            I worked non-teaching jobs while going to college. I worked them also while doing my student teaching and during summers (new teachers make very little). So I had accumulated enough quarters of social security for a pension. I also have my pension from over 40 years of teaching (technically a state pension).

          • Marie Lee

            Federal government does not go by state laws, only state workers are subject to state laws.

          • LagunaLady27

            Each state decides how to handle pensions. In several states, they have passed so called “windfall” laws that reduce how much their retirees are allowed to keep from their social security payments. I know this is true, because I live in one of those states. While at my appointment with the federal social security agent, I was told how much I was allowed to keep of the social security payments I had earned. It was 1/3. When I told him that I thought my amount would be reduced to zero, he replied, “We don’t steal all of it from you.”

          • Marie Lee

            Read my lips–worked under SS, THEN went to federal government job THEN back under SS to another job. The SS was NOT under the government. Now the government has SS but did NOT when I was with them!

      • LagunaLady27

        Wrong.

        • Marie Lee

          You were under state laws. I was under federal laws but the outcome is the same, cannot collect from two. This is completely wrong if you have worked under both at separate times. Others get SS & their pensions from private companies. Not fair at all to deprive us because we worked for some form of government, be it federal or state.

          • LagunaLady27

            I agree with your view on this subject. We were forced to pay into two systems, so we should get the same benefits as everyone else who did so. Also, our salaries were much lower than those of people in the private sector, so this is even more unfair.

    • mona

      Same thing if you work SS job and then work for STATE govt. I worked SS jobs for 20 years then working in a state job going on another 20 years. When I retire from the state job, I will only get roughly 40% of the SS amount I would have otherwise been entitled to, so as to prevent me from getting a “windfall” upon retirement. What a crock. I would be hard-pressed to live off just pension & SS, it’s hardly a “windfall”. But according to the federal govt they have to dock my SS to prevent me from getting “rich” off both payments. I paid into both systems and I should be able to collect from both systems without penalty.

      • LagunaLady27

        Same with teachers.

    • Did you pay into Social Security while you were working for the Federal gov’t? Those of us who do get SS, paid into it, in addition to paying into retirement accounts.

      • LagunaLady27

        Yes, but in several states they take, but do not give even when it is earned.

      • Marie Lee

        No, jobs with SS were before & after government employment, completely separate. Collected government pension until SS kicked in, then the pension was cut over $400 when the $199 SS started to pay! Does not make sense, but they say that would have happened if I didn’t apply for SS when I was eligible to collect it. This was originally intended for the big shots that collected a fortune on both, but unfortunately also applies to us peons!

  • Ronald Wilder

    I agree wholeheartedly with “LagunaLady27”–retirement means not having to deal with college funds, disability insurance, or the need for life insurance. My wife and I live on social security; I am retired and she is disabled. Other than SS, I manage to work part time as a musician and graphic artist. We were both victims of investment fraud and lost ALL of our retirement funds to a trusted investment counselor about 6 years ago. Now in Chapter 7 bankruptcy–and having lost our home–we have learned to live without credit cards and a peace of mind that comes from being rid of crushing debt.
    A piece of advice: get rid of everything you don’t need or want; it helps to rid yourself of any additional stress brought on by concern for “stuff”.

    • LagunaLady27

      Your experience is why retirement should be secure. Why does our country force so many people to gamble with their retirement money? It’s a pity. We need a system that provides trusted, experienced, knowledgeable experts to handle our funds. I’m lucky I had such a system.

      • Ronald Wilder

        Agatha Christie: “Where large sums of money are concerned, it is advisable to trust nobody.”
        Without going into details, my “trusted” advisor of 15 years turned sour, and he and another crook scammed over 100 people out of $20 million before one went to prison and the other blew his had off with a shotgun.

        • LagunaLady27

          I lost $200k cash, not just pretend equity, in a home purchase. The developer turned out to be a crook, but the attorney and bank that I checked him out with were unaware. How does anyone protect himself?

  • Sherrie Ludwig

    You forgot long-term care insurance, if you are married or want to leave an inheritance. If you need assisted care, it is crazy expensive, medicare only pays max 100 days for REHAB care, and then they start taking your savings, your pension, your social security, your house, etc. If you have enough savings and few/no debts after fifty or so, drop the term life insurance and get the LTC insurance. Your house may never burn down, you may never get into an auto accident, but about one in four elderly adults WILL need home care, nursing home, etc.

    • LagunaLady27

      I have seen too many LTC insurance companies increase premiums to outrageous levels and also go out of business. I have a nice pension and am putting away money each month, just in case I need this type of care one day. If I don’t, it will be a nice chunk to leave to my daughter.

  • Marie Lee

    Laguna Lady–you must have worked for the state that you live in? Some states also do this. I am talking about the federal government, although it’s the same situation & applies to all that worked under that system. I understand they are now all under SS but it was not that way years ago when the pension plan was in effect. I just know it’s very unfair!

    • LagunaLady27

      No, I was a teacher. Technically, that means I worked for the state. But the “windfall” provision is the same for all Fed, State and many other retirees. It was originally put in place so high paid legislators would not get super rich by retiring, but it also applies to those of us who made/make far far less than they do. Not fair.

  • MrKnowitall

    I really don’t like the idea of having a debit card. It puts your checking account at great risk. Why not use a credit card and just pay it off every month? The protection when using a credit card is much greater than you have with debit cards. Why not use someone else’s money anyway? If you lack the discipline to control your spending, well, that is a different problem.

    • Joe Smith

      I agree with you. With a debit card, they take your money from you, then if there is a problem you must fight to get it returned. With a credit card, I keep the money until I decide that everything is OK.

  • Georgia Wessling

    I do not have a debit card. I do not like them. I like the credit cards. I can charge something and have it on hold for over 30 days. I have been in deep debt and know what you must do to stay out of it. For the past 13 years, I have paid my cc’s in full each month. It is the best feeling in the world. And the rewards I have received account for almost half of my emergency fund. I have my cc limits lowered as far as they would allow and I still rarely use even 1/4 of it. I have life insurance of $15k, enough to bury me and have some left for my two kids to share. The insurance has them as equal beneficiaries. The same for my emergency fund savings and my checking account. My husband never had a will and neither do I. We got ourselves covered well. I have never invested. It is like gambling – you may win big or you may lose all you have.

  • Is this satire?

  • ronspdx

    Auto insurance is very important but it has a huge gap because of all the technology available to District Attorneys today. If you are in the “bad one”, the fatal accident no one wants to be in, the DA will look at all the data available from your car systems to GPS to cell phone records to security cams nearby and, IF he/she THINKS you were doing something wrong like distracted driving, texting or…., you can be charged with criminal charges. Your auto insurance defends you in civil court, not criminal court and a criminal defense attorney will ask for $20k, 30k, 50k or more retainer to even start working with you. My legal services plan will provide my defense with no limit in terms of money or time until the trial is concluded. (BTW, life insurance is for your family’s security and, if that’s important, getting your custom will done is just as important. My legal plan provides a custom will, living will and medical power of attorney and annual updates at no additional cost!)

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