How can you build a solid financial foundation?

Managing your current income and monthly living expenses can be the cornerstone of your financial life.

Creating a budget.

If you don't already have a budget, creating one can help you better manage your current finances. It may help to start reviewing your current spending by tracking what you purchase.

Creating an emergency fund.

An emergency fund helps cover unexpected expenses and avoid debt, such as medical bills or major car repairs. Many experts recommend saving three to six months of living expenses according to MyCreditUnion.

Read more:

• Prepare for the unexpected with an emergency fund

Saving for short-term goals.

After establishing a budget, plan for upcoming large expenses. Short-term goals may include saving for a home down payment or a wedding, which can help reduce financial strain when those costs arise.

As you get established in your job and personal life, you might begin to think about protecting your loved ones and the things you own from the unexpected.

Your family.

If you have a spouse, children or other family members who depend on your income, you may want to consider purchasing life insurance. If you pass away, it's intended to help provide money that could be used to replace your income. An insurance provider can help you compare term or permanent life insurance policies so you can decide what makes the most sense for your family.

Read more:

• Term life insurance 101
• Permanent life insurance 101

Your health.

If illness or injury limits your ability to care for yourself or work, long-term care and disability insurance may help. Long-term care insurance can help cover health or personal care services, while disability insurance may replace a portion of your income if you’re unable to work.

Read more:

• What is long-term care insurance?
• What is disability insurance?

Your car.

Liability car insurance coverage is required by law in most states. You may be able to purchase additional car insurance coverage, however, to help protect you, your passengers and your vehicle. Check with your insurance provider to see which coverage options are available where you live.

Read more:

• Typical components of an auto insurance policy
• What is auto liability insurance?
• What is collision insurance?
• What is comprehensive insurance?

Your home.

Homeowners insurance helps protect your home's physical structure and your belongings if they're damaged by a covered peril, such as fire or theft. A home insurance policy also typically includes liability coverage in case someone is injured while visiting your home.

Read more:

• What is homeowners insurance and what does it cover?
• What perils are covered by a homeowners insurance policy?
• What does home liability insurance cover?

Planning for long-term goals is also key when it comes to your finances. For some, this may include investing for retirement and their kids' college educations. Investment options you may want to consider include the following:

Mutual funds.

A mutual fund is a company that pools money from multiple investors (like yourself) and invests it in things like stocks or bonds. Mutual funds are commonly offered by many employee-sponsored 401(k) plans, and these funds are often what your money is invested in when you start an IRA plan.

Read more:

• What Is a Mutual Fund?

529 college plans.

529 plans typically come in two options: prepaid tuition plans and college savings plans. Prepaid tuition plans allow you to purchase college credits at today's price that can be used for your child's future enrollment in that college. A college savings plan allows you to open an account where the money you invest is typically placed in bond mutual funds, stock mutual funds or money market funds.

Read more:

• 529 college savings plans

Individual retirement accounts, or IRAs.

Traditional, Roth and rollover individual retirement accounts (IRAs) all allow you to invest in tax-advantaged savings for the future.

Read more:

• 5 things to know about traditional IRA distributions

401(k)s.

A 401(k) retirement plan is typically offered by employers. You may be able to have money withdrawn directly from your paycheck and invested into a traditional 401(k) plan on a tax-deferred basis — meaning you usually don't pay taxes on the money until you withdraw it during retirement. In addition, some employers may contribute money to the plan on your behalf.

Read more:

• Review your 401(k)

Annuities.

An annuity is an insurance product that allows you to invest a lump sum or periodic payments into it. In return, the funds can be converted into a steady stream of income that provides a specified payment either for a set period of time or for an indefinite period, such as your lifetime or the joint lifetimes of you and your spouse.

Read more:

• What is an annuity?

You may need to adjust your investment strategy as your retirement years approach to help make sure your investments and savings last. It may be helpful to talk to a financial professional to help you determine how to make your money work harder. In addition to your personal retirement investments, consider the following in retirement:

Social security benefits.

According to the Social Security Administration (SSA), about nine out of 10 Americans aged 65 and older receive Social Security benefits. The SSA also reports that the amount you receive is based on factors such as your age, years of work and average lifetime income, as well as any additional income you receive after retirement.

Read more:

• 5 things to know about social security

Life insurance.

When you retire, your budget and your living situation may change. When your retirement approaches, it may be a good time to chat with your insurance provider about whether your life insurance policy still suits your needs.

Planning for the future starts with a solid financial foundation. Your insurance provider can help explain your options so you can make the best decisions for your family.