Personal Finance | Our Digital Lives
By Bernard Freeman
Safeguard your online legacy
Estate planning isn’t just about physical possessions and financial assets, it also includes your digital assets.
As our lives become increasingly intertwined with the online world, it’s essential to recognize the importance of including digital assets like cryptocurrency, online accounts, NFTs and digital media in your estate planning strategy.
It has become an essential element of comprehensive financial and personal planning in the digital age. By taking proactive steps to document, protect and communicate your digital wishes, you ensure that your online legacy is managed according to your intentions, providing peace of mind for both you and your loved ones.
Definitions
Digital assets encompass a wide range of online properties. Cryptocurrency holdings can include your Bitcoin, Ethereum or other digital currency investments. Online accounts can include social media, email and online banking accounts. Digital media encompasses photos, videos, documents and creative works stored digitally.
Planning
Start by creating a comprehensive inventory of your digital assets. Include account details, access credentials and any encryption keys for cryptocurrency. Document any specific wishes or instructions regarding the management or distribution of these assets. U.S. Bank says assets might include social media accounts, subscription services, email accounts, online banking accounts, credit card accounts, utility accounts, contact lists, shopping accounts, photo and video sharing and storage accounts, smartphone data, computer data, cloud data, existing digital collections, personal websites or blogs, domain names, cryptocurrency keys and intellectual property.
Designate a trusted individual to act as your digital executor, responsible for managing and distributing your digital assets according to your wishes. Ensure they have access to the necessary information. Consult an attorney experienced in estate planning to help navigate the legal aspects of digital asset management. Laws regarding digital assets can vary by jurisdiction and are continually evolving.
Implement robust security measures for your digital assets, including strong passwords, two-factor authentication and encryption. Regularly update and maintain these security protocols.
Specific Considerations
For cryptocurrencies, provide clear instructions on accessing cryptocurrency wallets, including keys and passwords. Regularly update the value of your cryptocurrency holdings to ensure accurate estate planning.
Some social media platforms offer memorialization options that allow designated individuals to manage your accounts after your passing. Specify whether you want your online accounts to be deleted or preserved as a digital legacy.
Consider the preservation of personal digital media like photos, videos and documents. Some individuals choose to create digital archives or donate their creative works to libraries or institutions. Review privacy settings and permissions for online accounts and digital media. Decide who should have access to what, and under what circumstances. Smart phones often have ways to designate a survivor who will be able to access the data on your phone or unlock your phone in the event of your death.
Estate plans should evolve with your digital presence. Regularly review and update your digital asset documentation and wishes to ensure they align with your current situation. Store your digital estate plan in a safe place such as with your attorney, at an online storage platform or in a fire-proof, waterproof file cabinet or safe.
Side Hustles
In today’s ever-evolving job market, many individuals are exploring creative ways to augment their income.
Whether a person is looking to achieve financial goals, pursue a passion or simply enjoy a bit of extra financial security, side hustles have become a popular avenue for bolstering finances. A side hustle is any work outside your primary job that lets you complement your main source of income.
According to Bankrate.com, 39% of Americans have a side hustle, with Sidehustlenation saying that half of millennials have a side hustle and 70% of Gen Zs are looking to start one. They further say that the average side hustle brings in $1,122 per month if 12 hours are devoted to it, though LendingTree said the average side hustle is more likely to bring in $473 a month or $5,700 per year.
Upwork lists the most popular freelance jobs as writer, web developer, data analyst, graphic designer and programmer. One of the most profitable (and time consuming) side hustles is real estate sales.
Mastering side hustles is about finding the right fit for your skills, interests and schedule. Whether you’re looking for a part-time income boost or aiming to turn your passion into profit, the following side hustle ideas offer a diverse array of opportunities.
Online Tutoring
With the rise of online and remote education, tutoring has taken a digital leap. Subjects like math, language and science are in high demand and platforms like Zoom and Skype make it easy to connect with students. Whether you’re an expert in a particular subject or fluent in a foreign language, online tutoring can be a rewarding and lucrative side gig.
Handmade Crafts
For the creatively inclined, turning your hobby into a profitable venture is a dream come true. Creating unique items such as jewelry, candles or home décor and selling them on platforms like Etsy can be a fun way to channel your creativity profitably.
Pet Sitting/?Dog Walking
Pet owners often need reliable care for their furry friends. Offering services such as pet sitting, dog walking or even pet grooming can be a fulfilling and profitable side hustle, especially if you’re an animal lover.
Food Delivery Driver
The gig economy has given rise to a plethora of food delivery opportunities. With apps like UberEats, DoorDash and Grubhub, becoming a food delivery driver is as easy as signing up and hitting the road. It’s a flexible way to earn extra income on your schedule.
Virtual Assistant
Businesses and entrepreneurs often need assistance with tasks like email management, scheduling and administrative work. Becoming a virtual assistant allows you to work remotely and offer your services to multiple clients.
Home Renovation or Repair Services
Offering home renovation or repair services can be a lucrative endeavor. From fixing leaky faucets to remodeling bathrooms, there’s always a demand for skilled tradespeople. Make sure you are properly licensed and insured.
Early Retirement Goals
With the traditional retirement age fading into the background, the FIRE movement has ignited a blaze of financial freedom.
The FIRE movement stands for “Financial Independence, Retire Early. Investopedia describes it as a movement of people dedicated to extreme savings — sometimes as much as 70% of what they make — and of evaluating every expense in terms of how many working hours it takes to pay for it.
The FIRE Formula
The FIRE formula is: Save aggressively and invest wisely. FIRE enthusiasts aim to accumulate a nest egg that can sustain their desired lifestyle, allowing them to retire decades before the traditional retirement age.
Achieving FIRE often involves saving a large portion of one’s income. It could mean saving 50% or more of earnings, directing these funds towards investments rather than lifestyle inflation. Investopedia says that when proponents of this philosophy have a savings that is 30 times their yearly expenses, they retire. To cover living expenses, they make small withdrawals from their savings, typically around 3-4% of the balance yearly.
FIRE achievers carefully invest their savings in vehicles designed to maximize returns, such as low-cost index funds and tax-efficient strategies. Compound interest plays a significant role in accelerating their wealth accumulation. It is a lifestyle that encourages frugality. Practitioners prioritize spending on essential needs while cutting back on non-essential expenses.
Many FIRE proponents maintain side hustles or develop passive income streams to bolster their savings rate and provide financial security during early retirement. Early retirees must consider health care costs. Some leverage Health Savings Accounts (HSAs) or explore health care-sharing ministries to cover medical expenses.
FIRE Variations
Investopedia said there are three variations that have evolved depending on the lifestyle choices people make.
Fat FIRE is for those who have a high income. This is for people who make substantially more than the average worker and who want to maintain a traditional lifestyle. They do so with aggressive savings and investment strategies.
Lean FIRE is for those who will adhere to a very strict minimalist living style and extreme savings. These people typically live on $25,000 per year or less.
Barista FIRE adherents only partially retire. They keep part-time jobs that provide health insurance and use some of their savings without dipping into retirement funds.
Getting Started
Define your FIRE number. Calculate the amount of money you need to achieve financial independence and retire early based on your desired lifestyle. Create a budget that aligns with your savings goals and identifies areas for potential cost-cutting. Increase your savings rate by reducing discretionary spending and directing those funds toward investments. Learn about investment options and strategies that can help your money grow efficiently.
Maintain an emergency fund to cover unexpected expenses, ensuring your long-term financial plan remains intact. Consult with a financial advisor or planner who specializes in FIRE to create a personalized strategy.
