Categories
Articles

Learn the basics

emotional well-being icon

LEARN THE BASICS

8 rules for more constructive conversations

The root word of communication is communion, which means to share intimate thoughts. It doesn’t always mean coming to an agreement. It means there’s a flow, a willingness to open up, to listen and be heard, to understand and be understood.

Print

Looking for more? Find other articles below

two people talking

1. Keep the gloves on.

Mutual respect is rule #1. If you don’t respect the person you’re talking to then you may want to avoid having a conversation at this time. All parties should enter the conversation with positive intent — to understand and be understood.

2. Think it through.

The most important conversation is the one you have with yourself. Take a moment to collect your thoughts and the points you want to make. Then, stay on track and in the moment. Avoid bringing up unrelated topics. Know what your anchor is and refer to it regularly.

3. Stick to the facts.

State what you know to be true. This doesn’t mean you have to be a historian, medical expert or political scientist. Your lived experiences are true for you. The same goes for the person you’re speaking with.

4. Aim for dialogue. Not monologue.

Ensure that other people have a chance to be heard. Avoid raising your voice and interrupting or talking over people, even if they’re using these tactics.

5. Listen. Listen. Listen.

Instead of solely trying to prove your point, listen with the intent of understanding what the other person is trying to say. What can you learn from this conversation? What light can they shed? Is there something you hadn’t previously thought of or considered? Listening makes people feel seen, heard and valued. This can greatly increase the odds that they’ll do the same for you.

6. Stay calm.

Emotionally charged conversations can be extremely stressful. This can make us only want to engage with people who already agree with us. If we do engage, we can sometimes be defensive, say things we later regret, or stop listening altogether and simply wait until we get a chance to speak. When we keep our emotions in check, we open up consideration for other points of view and expanded thinking. If you need to step away from the conversation to collect yourself, that’s okay, too. Remember, the loudest voices aren’t necessarily right.

7. Use appropriate language.

Tuck away the insults, stereotypes and triggering comments. (Review the previous step if necessary.)

8. Show genuine interest.

Use the tips below to help your conversation partner feel seen, valued and inspired to return the favor.

  • Put away distractions. Turn off the phone. Pull out your earbuds. Make eye contact.
  • Repeat words or short phrases back. This lets the person you’re talking to know you heard what they said. For example, “You said you think what happened is unfair. Okay, can you help me understand why?”
  • Respect personal experiences and emotions. Refrain from making dismissive comments like, “It’s not a big deal” or “You’re overreacting.” Instead, say, “I hadn’t thought of it like that. I understand now” or “I was wrong. Thank you for correcting me.”
  • Ask questions. Go beyond the obvious and dig a little deeper. Ask questions like, “Why do you feel this is the best option?” “What was considered when arriving at your point of view?” “Can you tell me more about how you feel?” or “Can you explain why you think that?” In response, try saying things like, “I feel _ because of _.”

After a hard conversation, take time to think about what you discussed. Journal your thoughts. Write down what you learned, what you wished you had said or what you could have said differently. Ask yourself what you learned about yourself and others.

This kind of mindful review can help you recognize your blind spots. Over time, you’ll become more comfortable approaching challenging conversations.

Remember, none of us is perfect. We may sometimes miss the mark in our attempt to gain understanding, forget to mention something or, upon later reflection, have a change of heart. It‘s okay to revisit conversations and even concede ground if need be. In the end, we may have to agree to disagree to avoid jeopardizing relationships with people in our lives.

Source: AbleTo. How to have difficult conversations.

Categories
Articles

Check it out

financial well-being icon

CHECK IT OUT

How to have a fearless financial life

Few people are completely rational when it comes to money. Most of us don’t create and follow a budget or save something every paycheck, though we think we should. We know we need a financial plan, but somehow it doesn’t happen. We often spend too much money because it’s more fun to buy a higher-priced item today than to put the money in savings and wait twenty years to reap the rewards. Often we spend too little because we feel guilty. And sometimes our behavior with money brings on uncomfortable feelings.

Print

Looking for more? Find other articles below

person surfing on wave of money

Many of us have a complex relationship with money. We make decisions about money that impact our financial situation, and those impacts in turn affect our feelings and future behaviors. And it’s a relationship that evolves over a lifetime.

Here are three key things to know about our relationship with money:

  • Emotion plays a huge role.
  • Anxiety and avoidance create a vicious cycle.
  • Our family dynamics and past experiences affect our behavior.

Emotion and money

The emotions you connect to money, including fear, envy, shame and guilt, tend to drive your actions.

What’s there to be afraid of? You might be afraid of looking foolish, for example, when it’s your turn to pick up the check and you’re short on cash. Perhaps you’re afraid that you’ll never have as much money as the people you see on TikTok and Instagram. If you’re making more money than your friends, you might be worried that they secretly envy and resent you. Or you might fear being exposed or humiliated if you experience a sudden drop in income.

Shame is one of the most common and powerful emotions associated with money and personal finance. It’s one of the main reasons people avoid doing what they know they should. 

Here are just some of the possible versions of shameful feelings related to money:

  • I don’t have enough money.
  • I’ve avoided thinking about finances.
  • I’ve avoided doing what I’m supposed to do about finances (creating a safety net, planning for retirement, sensible budgeting).
  • I’m really ignorant about all of this.
  • I spend too much.
  • I buy stuff when I’m unhappy.

Shame interacts with avoidance to create a vicious cycle. When you’re filled with shame, the natural tendency is to avoid facing whatever is making you uncomfortable. That avoidance itself leads to additional shame and more avoidance. Next thing you know, your taxes are overdue, and it’s six years since you decided to finally make an appointment to see a financial planner – and it still hasn’t happened.

People who avoid tackling financial necessities often label themselves procrastinators and assume they’re just lazy or undisciplined. That’s not helpful. The fact is, we’re hardwired to try to avoid things that make us feel anxious or uncomfortable. The tricky thing is that in the very short run, avoidance works to reduce anxiety. Because it works, you’re inclined to do it again in the same circumstance.

The vicious cycle of anxiety and avoidance

Here’s how it unfolds. You’re thinking about sitting down, taking a hard look at your financial situation and creating a realistic financial plan. But just thinking about it increases your anxiety, because you’re afraid you won’t be able to face the reality that, for example, you have nowhere near enough saved for your kids’ education. That anxiety leads to avoidance. You postpone the task and distract yourself. At that moment, your anxiety level immediately drops, giving you positive reinforcement for avoidance.

You repeat this cycle over and over. But each immediate drop in anxiety doesn’t quite bring you back to the previous baseline level of distress. And over time, your overall level of anxiety increases and increases.

So, what happens when you confront this unpleasant task? As you face the facts, your anxiety temporarily increases. If you stay with it, however, the overall level of anxiety will steadily decline. You have to tolerate that short-term increase in distress to benefit from the long-term decrease in anxiety. In the end, the lesson is that reality makes a better friend than avoidance.

Other emotions that come into play with money include envy, greed, over excitement and a social-psychological phenomenon known as “jumping on the bandwagon.” Some of these are more relevant in the realm of professional investing as opposed to personal finance.

Family and childhood influences never end

Every family has its own particular psychology of money. What can be talked about, who should be in control, what money responsibilities are assigned to what gender, how important money is or isn’t.

Additionally, there are always stories about money that are part of a family’s identity. Maybe a serial entrepreneur grandfather lost the family fortune, prompting later generations to be very conservative with money.

You may have experienced subtle pressures to right the wrongs experienced by previous generations. Or you may feel internal pressure to oppose the family money mentality. If you’re the first in your family to succeed, you might want to give back to the rest of the family and neglect your own financial needs.

How to harness money emotions

Emotion isn’t all bad. It tells you what you’re passionate about, what really matters to you. It makes you feel alive. Anxiety isn’t all bad either. A little anxiety can motivate you to make much-needed changes that improve your situation. Harness it to tackle what you need to face and know that you’ll feel better when you’ve done so.

The key is self-awareness. Much of our emotional world is unconscious. But it’s not that hard to access. You just need to know what to look for and have a blueprint for the kinds of emotions and family stories that can influence your personal relationship with money.

Source: Forbes. The psychology of money: what you need to know to have a (relatively) fearless financial life.

Categories
Articles

Explore more

emotional well-being icon

EXPLORE MORE

The emotional side of disaster

Hurricanes, earthquakes, train derailments, mass shootings, wildfires, you name it. Disasters lead the nightly news and leave a wake of destruction. But sometimes the emotional stress they cause lasts far longer and can result in greater harm than the more immediate financial and physical damages do.

If you’ve experienced a disaster and still feel the emotional impact, there are actions you can take to feel better. Understanding your responses to upsetting events can help you cope with your feelings, thoughts and behaviors, and help you on the path to recovery.

Print

Looking for more? Find other articles below

worried person looking over his shoulder at gray cloud and lightning bolt

After a disaster, your emotional well-being needs care

Remember that:

  • It’s normal to feel anxious about your own safety and that of your family and close friends.
  • Profound sadness, grief and anger are normal reactions to an abnormal event.
  • Acknowledging your feelings helps you recover.
  • Focusing on your strengths and abilities helps you heal.
  • Accepting help from community programs and resources is healthy.
  • Everyone has different needs and ways of coping. It’s common to want to strike back at people who have caused great pain.

Find ways to ease disaster-related stress

Here are some actions you can take:

  • Reach out to Resources For Living® (RFL®)* for in-the-moment and ongoing emotional support for personal issues, 24/7. Remember you have six free counseling sessions that can help you deal with post-disaster stress and other mental health concerns you may experience after a traumatic event in your community.
  • Talk with someone you trust about your feelings of anger, sorrow and other emotions — even though it may be difficult.
  • Don’t hold yourself responsible for the disastrous event or be frustrated if you feel you can’t help directly in the rescue work.
  • Take steps to promote your own physical and emotional healing by eating a healthy diet, getting plenty of sleep, exercising, relaxing and meditating.
  • Try to maintain a normal family and daily routine, and limit demanding responsibilities for yourself and your family.
  • If there are memorials, participate in them.
  • Turn to your support groups of family, friends and religious institutions.
  • Ensure that you’re ready for future emergencies by restocking your disaster supplies kits and updating your family disaster plan. Taking these positive actions can be comforting.

Your top concern after a disaster should be your own health and that of your family. To feel in control of your life and situation, limit your media exposure and keep your routines consistent. Also seek professional help for yourself and/or loved ones who are suffering emotionally and physically.

Disasters don’t happen often, but they do happen. Fortunately, there are people and organizations you can turn to for help.

Source: Resources For Living. Coping with disaster.

Categories
Articles

Take action

emotional well-being icon

TAKE ACTION

5 ways to reduce mental health stigma

Taking control of your mental health is no easy task. The stigma surrounding mental health can be so deeply ingrained in us that we may believe we aren’t allowed to be depressed, anxious or sad. But these feelings are part of the human experience, and we must make room for them.

Being connected to our emotions has the power to positively impact every aspect of our lives. Getting honest with ourselves about the state of our mental health can improve our relationships, and it can help us lead healthier and more fulfilling lives.

Print

Looking for more? Find other articles below

friends comfort each other over coffee

How can you help reduce the stigma around mental health?

number 1

Talk openly about mental health.

Share your stories about your own mental health challenges. This helps to fight the stigma and normalizes those experiences.

number 2

Watch your words.

Be careful how you talk about mental health issues. Don’t use negative words like “crazy” or “insane” in casual conversation.

number 3

Understand that mental health is just as important as physical health.

Recognize that using medication or therapy to manage anxiety or depression is the same as using medication or doctor visits to treat a physical health condition.

number 4

Reach out for support.

Don’t be shy about getting mental health support when you need it. Work with a therapist or coach. Use a mental health app to journal or track your moods. Schedule your favorite self-care activity.

number 5

Seek out accurate mental health information.

Find dependable resources to debunk mental health myths. Follow organizations like the National Alliance on Mental Illness (NAMI) or Mental Health America.

quote left icon

“My AbleTo* therapist really listened to me and helped me figure out how to move forward. She helped me look at things differently and ask different questions than I had been. And when I was able to see things differently, I was able to react to my problems more constructively, really get myself unstuck and lower my anxiety greatly.”

— Costco employee

*AbleTo is not available in Puerto Rico.

Source: AbleTo. 5 ways to reduce mental health stigma.

Categories
Articles

Learn the basics

financial well-being icon

LEARN THE BASICS

How to find affordable therapy

When searching for a counselor or therapist, it’s easy to become discouraged by the choices, costs and lack of availability. Out-of-pocket therapy typically costs anywhere from $100 to $200, with higher costs in more expensive urban areas.

You may be tempted to end the hunt and find other ways to cope with life’s challenges. And while lifestyle changes, such as getting enough sleep and regular exercise, can be enormously beneficial for your mental health, meeting regularly with a mental health professional can be an invaluable resource.

But don’t give up on connecting with a counselor before taking a closer look at what’s available — some of it for free — through your Costco benefits.

Print

Looking for more? Find other articles below

A person sitting in a chair speaking with their therapist, thought bubble of money appears

Make Resources For Living your first stop

Costco is committed to the well-being of employees and their dependents. Resources For Living® (RFL®) is just one example of that commitment. RFL, Costco’s employee assistance program (EAP), gives you access to a wide range of mental health support services as well as assistance in finding the resources that best meet your needs. And it’s free to you, your household members and your dependent children up to age 26, whether or not you’re covered by a Costco medical plan.

Find support every step of the way

The front door to RFL services and support is your RFL Care Partner. They are your single point of contact throughout your mental health journey. Not only can they help you understand your benefits, they can also guide you through your options, help create a plan and connect you to care that meets your preferences.

For example, if you’d prefer a therapist who bills on a sliding scale (based on your ability to pay), offers evening hours and is your same gender and ethnicity, your Care Partner will do the leg work for you and find an in-network provider who is accepting new patients and checks all those boxes.

They will also refer you to resources in your community and connect you with the many work-life support services that are available through Resources for Living.

Care Partners are available 24/7:

  • Connect with a Care Partner by calling 833-721-2320 (TTY: 711)
  • Visit RFL to access Live Chat

Take advantage of six free counseling sessions

Through Costco, you and every member of your household have access to six free counseling sessions, with in-person, televideo and chat options. You decide what works best for you. Counselors can help you with such issues as:

  • Relationship support
  • Stress management
  • Work/life balance
  • Family issues
  • Grief and loss
  • Depression
  • Anxiety
  • Substance misuse
  • Self-esteem and personal development

All RFL counselors are qualified mental health professionals. But, if for any reason you’d prefer to talk to a different counselor, just contact RFL and they’ll help you get scheduled with someone else.

Explore other RFL mental health resources

RFL also provides the following mental health resources.

  • Talkspace offers virtual therapy for teens 13+ and adults. Send text messages to your therapist via web browser or the Talkspace mobile app. Your therapist will typically respond once per day, five days per week. You also have the option to meet with your therapist online for 30-minute televideo sessions. Each meeting counts as one of your free sessions. If you are enrolled in an Aetna Medical plan, you can continue to access Talkspace services after you’ve completed your free sessions, with a $15 copay.
  • Digital self-paced support: Access to evidence-based support tools to help manage depression, anxiety, work/life balance, stress, substance misuse and more.

Get mental health support through your Costco medical plan

If you’re enrolled in a Costco medical plan, mental health benefits are covered through your plan, including counseling and substance-misuse treatment. If you want to continue counseling after your six free sessions, you can continue with your therapist under your Costco medical plan, with deductible and co-pays. Your Care Partner can also help you find another in-network therapist, if that’s your preference.

Before you pay out of pocket for therapy, turn to your Costco medical plan for local therapists who are in your network. You can find a counselor, therapist or psychiatrist, just as you would any medical provider, by going to Costcobenefits.com and clicking Find a Provider under What if I. You can even narrow your search by specialty, such as anxiety disorders, child specialist, marriage/family focus and many more. You’ll pay the same copay for a therapist that you would for a medical doctor.

Money got you stressed?

Americans say money is their number one stressor. To learn how to deal with money stress and improve your financial management skills, visit SmartDollar and create your free account. Key word: costco.

Source: Resources For Living

Categories
Articles

Take action

physical well-being icon

TAKE ACTION

Video: The brain-changing benefits of exercise | TED

You know that feeling you get after a brisk half-hour walk? Suddenly, you’re full of energy, cheerful and ready to handle the tasks that seemed overwhelming minutes before. That feeling of emotional well-being is not your imagination. It’s the measurable result of changes in your brain you put in motion when you put your shoes on and walked out the door.

In her 13-minute TED Talk, neuroscientist Dr. Wendy Suzuki explores the powerful effects of exercise on your mood, brain function and long-term brain health.

Print

Looking for more? Find other articles below

+

Show transcript

Source: TED Ideas worth spreading. The brain-changing benefits of exercise.

Categories
Articles

Learn the basics

financial well-being icon

LEARN THE BASICS

Video: 5 ways to create financial stability

How do you get out of debt, stretch your paycheck, grow your savings, and prepare for retirement and other big-ticket life expenses? The smartest move you can make is to get started now with some practical guidelines from this short video.

Print

Looking for more? Find other articles below

Watch Video

When it comes to financial stability, the earlier you get there, the better off you’ll be in the long run. But you won’t have to do it alone. Your Costco benefits can help. They offer information that can help you develop healthy financial habits and ways to help you build your nest egg. For more information, check out the “Resources for you” section below.

Source: Healthwise. 5 ways to create financial stability.

Categories
Articles

Check it out

physical well-being icon

CHECK IT OUT

Why exercise matters

When you exercise regularly, you feel better. But that’s just the beginning. Exercise can have an enormous impact on your long-term physical health, behavioral health, mental sharpness, financial well-being and quality of life. And it doesn’t stop there. The benefits also impact our local and national economies, military readiness and more.

Print

Looking for more? Find other articles below

person flexing arm

Exercise affects more than just your own long-term health.

The benefits of exercise reach far and wide — as you can see in the chart below from Centers for Disease Control and Prevention (CDC).

Source: Centers for Disease Control and Prevention. Physical activity — why it matters.

Categories
Articles

Learn more

financial well-being icon

LEARN MORE

Get top marks in financial aid

Have you always wanted to get your degree? Would vocational training prepare you for work you’ve always wanted to do? Are you hoping to send your kids to college?

According to U.S. News & World Report, the average cost of tuition and fees for the 2022–2023 school year is $39,723 at private colleges, $22,953 for out-of-state students at public colleges and $10,423 for in-state residents at public colleges.1 But financial help is available. Get started by taking the five steps below.

Print

Looking for more? Find other articles below

A+ report grade on money paper

Step 1: Look for “free” money first.

First, try to get “free” financial aid (the kind you don’t have to repay). Scholarships are an attractive type of aid because they do not have to be repaid and many are not based on financial need. They may be awarded to students who have excelled in specific academic areas, or specialty areas such as music or sports. Thousands of private scholarships are available through various companies, organizations, private foundations and clubs. Information may be found online at numerous sites, including fastweb.com or Scholarships.com. Comprehensive guides are published and updated each year on specific scholarships, eligibility criteria, etc., such as the College Board Scholarship Handbook or Peterson’s Scholarships, Grants and Prizes.

Costco is making college more affordable for employees

The Costco Employee Scholarship is available in amounts up to $2,500 per academic year for up to four years for eligible Costco employees.

To be considered for the Costco Employee Scholarship, applicants must:

  • Be a regular part-time or full-time Costco Wholesale Employee residing in the United States (College Retention employees are eligible to apply).
  • Be enrolled or planning to enroll in an accredited U.S. college or university.
  • Have a high school diploma or equivalent by June 2023.
  • Plan to pursue a 2-year or 4-year undergraduate degree or certificate at a nonprofit, accredited college or university in the United States starting fall 2024
  • Not have obtained a bachelor’s degree at this time.

Learn more about the Costco Employee Scholarship, including the application timeline. To check your eligibility, call 877-655-4097.

Free financial aid usually doesn’t cover 100% of your costs. So you may need to find other ways to pay for college or vocational school, including taking out low-cost loans and using any money you may have saved.

To apply for any financial aid, you’ll need to complete the FAFSA® form. This is the financial aid application used by the federal government and most colleges and universities. If you list more than one college on your FAFSA, you’ll receive a financial aid offer from each of those schools. These offers will likely contain a combination of free aid and low-cost loans. Review each school’s financial aid offer carefully.

Step 2: Know your deadlines.

Financial aid deadlines are specific to your situation — your school, where you live, what you study.

  • The FAFSA deadline is the most important deadline you should know. Check the FAFSA deadlines.
  • Deadlines for aid from your state, school and private sources tend to be earlier than those for federal aid.

Make sure you have some way to keep track of all your deadlines. For example, write important dates on a calendar, or track them on your smartphone.

Step 3: Fill out the FAFSA.

You must complete the FAFSA every year to qualify for:

  • Federal and most state grants, scholarships, low-cost student loans, and work-study programs
  • State programs
  • Many school-based financial aid programs

The FAFSA is your ticket to financial aid. Check the FAFSA deadlines.

Step 4: Compare schools’ financial aid offers carefully.

How schools determine your financial aid

The schools that you list on your FAFSA receive a Student Aid Report (SAR), which details your FAFSA results. The SAR reports your expected family contribution (EFC).

Here’s how it works:

  • Each school uses your EFC to calculate your financial need. This determines your eligibility for financial aid.

Then each school creates your financial aid offer, which can contain federal, state and institutional grants, scholarships, work-study, low-cost loans, and other aid.

Understand what you have received.

Your financial aid offers will differ from school to school. This is based on differences in the cost of attendance, available aid and school-specific criteria for awarding certain types of aid.

When comparing your financial aid offers, consider the following:

  • Calculate the percentage of the offer that is “free” money. You don’t have to repay free money if you continue to meet all the obligations. So the more free money you get, the better.
  • Compare “apples to apples” when it comes to the actual cost of attending each school. The actual cost encompasses more than just tuition; it includes books, meals, housing and more.
  • Make sure you understand the long-term responsibilities associated with each financial aid offer, and choose the most appropriate offer for your situation:
    • Does your financial aid offer contain any grants that may become loans and require repayment?
    • Will you or your child have time for a work-study job?
    • Are you or your child prepared to pay back any educational loans?

Step 5: Be sure you have the money you need.

Once you’ve received your financial aid award, you need to make sure you have enough money to cover all your education costs.

Know your education costs
  • Direct costs — Costs associated with attending school that are included in your award letter:
    • Tuition/fees
    • Room/board (institutionally owned housing)
    • Meal plan
    • Books and supplies
    • Miscellaneous personal expenses, as determined by the school
    • Parking
    • Transportation
  • Indirect costs — Additional costs that may require money beyond what’s allotted in your award letter:
    • Off-campus housing
    • Food not purchased through a meal plan
    • Medical coverage
Be smart about borrowing

What should you do if you have exhausted all sources of funding, including scholarships, grants and low-cost federal loans, and you still have college costs to cover? First, contact your school’s financial aid office. Your school may offer payment plans that let you distribute your payments throughout the year.

Consider private education loans only as a last resort. Private education loans often have higher interest rates, more fees and less flexible repayment options than federal loans do.

  • Be sure you have exhausted all other financial aid options before applying for a private education loan.
  • Borrow only what you need to cover your costs, not what you are eligible to receive.
  • Understand the terms of the loan before you agree to (and sign) anything.
  • Find out if you can defer payments while in school or get a lower interest rate with a co-signer.

1U.S. News & World Report. See the average college tuition in 2022–2023.

Sources: Pennsylvania Higher Education Assistance Agency (PHEAA). 5 steps to financial aid.
Resources For Living (RFL®)*. Financing college: grants, loans and scholarships.

*Resources For Living is available to all employees and members of their household, including children up to age 26 living away from home.

If you or a member of your household is interested in pursuing a college education or vocational training, the following resources can help you discover ways to pay for it. These resources are confidential and available to you at no extra cost.

Categories
Articles

Explore more

EXPLORE MORE

Why do you need a beneficiary?

When someone dies without naming a beneficiary — or leaving a will — their loved ones inherit a legal tangle. But what exactly is a beneficiary? Are there special rules for choosing one? And when do you need to name a beneficiary?

Doing the right thing for yourself and your family can be confusing — but it doesn’t have to be. Here’s what you need to know to choose your beneficiary, or beneficiaries, with confidence.

Print

Looking for more? Find other articles below

family standing together

What is a beneficiary?

A beneficiary is a person or organization you choose to inherit your wealth when you die. Your wealth can include your home, investments, cars and other possessions, from antiques to baseball cards. You name beneficiaries in a legal document — such as a will, trust, life insurance policy, annuity or retirement account.

Here are some examples of the people and organizations you can name as your beneficiary:

  • A person (or multiple people)
  • The trustee of a trust you’ve set up
  • A charity or nonprofit
  • A minor (child under 18 years of age)
  • Your estate (in the case of a life insurance policy)

Why you need a beneficiary.

You work hard for your money. And you want to know your family will be secure financially when you’re gone. That’s the most important reason you need to name a beneficiary — or beneficiaries: to make sure your wealth ends up in your loved ones’ hands. Here are some others:

  • Clarity — Grief is stressful. When things aren’t clear, the confusion can result in family strife and resentment. Naming beneficiaries makes your wishes crystal clear. And in most cases, legally protected. It also keeps the peace among your relatives.
  • Speed — When you name beneficiaries in your will, a lot of your estate — the money, property and possessions you leave behind — will bypass probate altogether. (Probate is a court that proves a will is valid.) That means your family will get their funds faster and won’t spend a lot of time in probate court.
  • Control — When you name beneficiaries in a will or life insurance policy, you control where your money and possessions go — and who gets it. If you don’t name one, the state you live in (California, for example) determines how your assets will be distributed to your heirs. Depending on the state you live in, that might even include ex-spouses!

When do you name a beneficiary?

You name a beneficiary for almost anything dealing with your money, including:

  • Life Insurance policies, including Costco’s Life Insurance and Accidental Death & Dismemberment available to all Costco Employees enrolled in the medical plan
  • Retirement accounts, including Costco’s Retirement Plan available to most Costco Employees
  • Your last will and testament
  • Social Security disability (in some cases)
  • Savings accounts and checking accounts

You can name any person or organization you want as a beneficiary. However, remember that if you name a minor child, and you pass away while they’re still a minor, the payout is sent in their name to the legal guardian of the minor child’s estate. And if you haven’t already named a legal guardian in your will, a probate court will appoint one for you.

Types of beneficiaries

There are two common types of beneficiaries: primary and secondary.

  • A primary beneficiary is the person (or people or organizations) you name to receive your cash, property and possessions when you die.
  • A secondary beneficiary is second in line to receive your assets in case the primary beneficiary passes away.

Naming alternate beneficiaries in your will is a simple way to avoid problems and confusion. It might seem trivial, but the consequences of skipping this step can be painful. For example, if your primary beneficiary is unable to receive your assets, and you didn’t name an alternate beneficiary, your assets will go back to your estate and go through probate.

How to choose your beneficiary

When choosing a beneficiary, you need to think about the people who depend on you financially. If you’re married, you’d likely choose your spouse as the primary beneficiary, and your spouse would choose you. (Yes, your spouse needs a will, too!) Together, you would name primary and secondary beneficiaries — in case something happens to both of you.

Keep in mind, people outside your immediate family may also depend on you. Do you help your parents pay their medical bills? Did you agree to pay for your niece’s education? Since you can name more than one beneficiary, you can specify what (and how much) each of these people would receive when you die. That way, those who depend on you can still count on your financial support.

Here are some questions to answer as you choose a beneficiary:

  • Who depends on your financial help? Make sure they’re included as a beneficiary.
  • If you have children who are minors, who will be the trustee of their money until they turn 18?
  • Will you set any conditions on when your children can receive your assets, for example, when they graduate from college, turn 25, pay off any debt they have, etc.?
  • Do you want any assets to remain in the family, for example, heirlooms, property, etc.?
  • Remember, if you divorce, your beneficiary isn’t automatically changed. You have to take care of choosing a new beneficiary and changing your documents.

Remember, if you divorce, your beneficiary isn’t automatically changed. You will need to designate a new beneficiary after your divorce is finalized.

Don’t leave your loved ones stranded!

Naming a beneficiary in your will might sound like a huge, time-consuming action, but it’s not! And when you do, you can breathe easier knowing you’ve taken the steps to protect your assets and spared your family unnecessary conflict and stress. Your loved ones will be grateful.

Source: Ramsey Solutions. What is a beneficiary?