Affordable Ways Lower-Income Americans Can Create a Legacy for Loved Ones

Leaning on the Power of Life Insurance

As a lower-income American, you have probably dealt with the tough decisions on how to stretch each dollar. You likely wonder how you could possibly create financial security for your family after you're gone. Luckily, one creative and affordable way to leave a legacy is through a life insurance policy.

Now, don't feel overwhelmed by the term. When most people think of life insurance, they automatically think expensive. But, it doesn't have to be. There are affordable policies designed specifically for lower-income individuals. Investment in a term life insurance policy can provide your loved ones with a cash payout upon your passing.

Establish a Legal Will

No matter what wealth bracket you fall into, crafting a legal will is a necessary step in ensuring that your possessions and assets get distributed according to your wishes. It designates who should get what, making the process easier and more streamlined for your loved ones. In the absence of a will, your property will be distributed by pre-determined state laws, which may not align with your visions or desires.

Invest in Real Estate

Exploring affordable real estate options is a great way to leave a tangible legacy. If you're a renter, consider the possibility of owning a home. Look into government assistance programs, find out about first-time homeowner programs, or discuss with Habitat for Humanity. Even if you're unable to pay off a house before passing, owning real estate still equates to a sizable asset that can be passed down to loved ones.

Open a High-Yield Savings Account or CD

Placing your money into a regular checking account might seem like the easy route, but it doesn't help in growing your savings. Elect to keep your money in a high-yield savings account or Certificates of Deposit (CDs) instead.

Both these options will allow your money to grow over time due to compound interest. It may seem like a slow process, but even a little saving goes a long way in leaving a legacy.

Create an Educational Fund

Investing in the future education of your children, grandchildren, or even nieces and nephews is another heartwarming way to leave a legacy. You don't necessarily need to fully fund a college education. Start by saving a small, feasible amount regularly.

Setting up a 529 college savings plan or a Coverdell Education Savings Account can be an effective way to invest in your loved ones' future education. The amount may not cover all the costs, but every penny can lead them closer to a brighter future.

Personal Investments

Another affordable strategy is investing in stocks, bonds, or mutual funds. Start by exploring low-risk options that allow your investments to grow over time. You don't need to be an expert in the stock market. Many companies offer robo-advisors that cater to novice investors to help you make informed decisions.

Gifts while You're Living

It's always a joy to see loved ones enjoy the benefits of your legacy while you are still alive. Consider gifting money or other assets while living, as this can also have potential tax benefits.

Paying off Debt

Debt can be a major concern when thinking about the legacy you will leave behind. Try to pay off debt as much as possible during your lifetime. This includes credit cards, personal loans, mortgages, and more. Your loved ones will not be responsible for your debt unless co-signed, but unpaid debt can eat into your estate.

While the focus here is financial aid, remember that the idea of leaving a legacy is not limited to money. You can also leave significant emotional, spiritual, or wisdom-based legacies. Sharing knowledge, good life habits, traditions, and values are soul-enriching legacies cherished by loved ones beyond material possessions. Nonetheless, every small step taken towards ensuring a better future for your family is a step in the right direction.