- Emergency fund. Everyone, no matter their age, should have one of these. You should have enough liquid assets (cash, money in the bank, etc) to see you through six or more months of living expenses in case you lose your job, become ill or injured and require a long recovery period, etc. We have this, it hangs out in a savings account not doing much but waiting for an emergency to happen. Note that when you have no debt and have cut your living expenses drastically this fund doesn't have to be that big.
- Cash on hand. Everyone, no matter their age, should have a couple hundred dollars on hand. This is useful if the ATM is out, the restaurant won't take your credit card, etc. and you need immediate money. I don't go anywhere without cash. I don't use it much but it is nice to know it is always there if needed.
- Car insurance. If you own or drive a car you need to be insured. Full coverage is best if you have a newer, more valuable car and don't have the money to replace it should it get wrecked. Liability only is OK if the car is older, worth less, and you can easily cover the value out of your emergency fund. We have one old vehicle so we only keep liability insurance on it. If it gets wrecked we can easily buy a new car but so far this baby is 16 years old and still going strong. Note that when you don't equate your ego to your vehicle you can drive a good running car pretty much forever.
- Health insurance. Everyone needs this as well. If you get seriously ill or injured you can be bankrupted by one visit to the ER these days. Getting the right health insurance takes some research and thought, especially when things get complicated (ie: transitioning from an employer's policy to Medicare, trying to figure out Medicare which is a nightmare in itself, etc). Although I am well covered by insurance, I'm eagerly waiting for single payer healthcare insurance because our current health-insurance-dominated healthcare industry is a freakin mess.
- House insurance. This is another necessity. If you are a renter, get renter's insurance. This is another area where you need to do your research as you need to figure out how to cover your costs (liability, home replacement costs, content replacement costs) without going overboard. Note that you should annually review your house insurance policy as many seem to have automatic increases so shopping around if yours seems to be getting too expensive may save you money on this.
- Life insurance. You may or may not need this. Everyone should have enough money to cover the cost of burying themselves and paying off their debts. If you have no debt, no one dependent on your income, and have plenty of money in your emergency fund, you may not need life insurance. If you have debts, no savings, and a wife and six kids depending on your income you NEED life insurance. Term life insurance (IMHO) is your best bet.
- Long term care insurance. As people live longer and sicker than they ever have before AND as fewer and fewer families see it as their duty to take care of their elderly loved ones, this type of insurance is more and more important. How will you pay for your care (nursing home, assisted care facility, etc) when you are old and sick?
- Debt. You should have none. I am very anti-debt even though so many others rave about "low easy payments", "super low interest rates", and all that garbage. Basically if you never carry debt, pay cash for your vehicles, and pay off your house ASAP you will be miles ahead of most people. You will also need a smaller emergency fund, can easily get by an a low monthly income, and will be pretty stress free when it comes to your money.
- Savings. You should have lots. It is not that hard to save money if you do it consistently and over a long period of time (and resist unnecessary shopping, spending on things you can't afford, etc). You should have a variety of savings accounts (emergency fund, vacation fund, gift fund, retirement savings like a Roth IRA, etc).
- Income. Whether you are young and just getting started or old and retired, you need to have income, of course. I am a fan of multiple sources of income. The more money I have coming in each month from a variety of sources, the happier I am. If I was only relying on Social Security...well that would be a bad thing. When you are young, your job is to have as many pots in the fire as you can handle with the goal of building a solid skill set and long-term income. When you are old, you need to be set up financially to the point that you will still have multiple sources of income including Social Security, a pension, income from retirement savings and retirement investments, maybe some rental property income, royalties are nice, and the occasional part-time job or hobby income is good as well. Note that as you get older it is a good idea to know all of the financial rules that govern such things as when to take Social Security, how earned income will affect your Social Security, when you must take retirement savings disbursements, etc.
- Passive income. The very best kind of income source is to have money come not from your daily work but from an investment you have made of your time or money which is now paying dividends. The income on your savings is a form of passive income (a dismal source but still it shows how your money can be making money for you). Royalties from previous projects (music, books, acting, etc) means you are getting paid for something you have done a while ago but it is still generating income. Investing is a huge whole topic unto itself but suffice it to say, if you put your money into something that will (hopefully) make it grow like stocks, bonds, mutual funds, etc. you will have a continuous source of money. Note that investing is hardly passive at first as it takes some bit of work to know what you are doing in the field AND, depending on the investment it can be kind of secure or not secure at all--either way you could lose everything.
- Retirement income. There is a special sort of passive income for retirees that will keep the money coming in long after you have stopped working. These include Social Security (it's nice but not nearly enough to live on if that is the only income you have), a pension (these are also nice but there is no guarantee that it won't implode like Enron so don't plan to live on only your pension for the rest of your life), retirement savings as noted above, your 401k, etc. Whatever you do, don't look into these things when you are 65. You need to focus on building these from your very earliest years of working so there will be enough to see you into a comfortable retirement.
- Buying stuff to sell now or later. Another source of income has to do with buying things you hope will appreciate in value so you can sell them off in the future and collect a tidy sum. This can range from buying antiques or guns, flipping houses, building up a business, buying jewelry or foreign currency...all of these things require your money/time/effort now but will hopefully bring a profit when it comes time to sell.
- Wills, trusts, power of attorney, etc. These official documents direct how you want things to go after you die. You NEED these things. I've seen it happen way too often when someone says "we know grandpa wanted..." but grandpa is dead and the evil aunt sweeps in and takes everything she can get her greedy hands on because it wasn't written down. Similarly, inheritance laws vary a great deal by jurisdiction--you don't want to leave your kid a nest egg only to have half of it sucked up by inheritance taxes. The creation and planning of these documents take legal and financial expertise that is well worth paying for.
- The intangibles. I say these are intangible but they are just as important as all of the above. Keeping yourself as healthy as possible, making financial planning your new vocation on a (very) regular basis, keeping up great relationships with your family and friends, keeping up to date in your field even if you are retired...all of these things will add extra security to your old age.
As you can see by this (very) long post, being financially prepared--especially being prepared for the point that you will no longer be able to work and create an income, is of paramount importance. Start now to plan for any and all scenarios you can conceive of: what if you die long before your spouse, when if the spouse dies long before you do, what if you are ill for a long time before death, how will you transfer money to your kids, do you want to transfer money to your kids, how long will you keep the family farm before the amount of work and upkeep it takes isn't worth it...there are a lot of things to consider here.
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