You’re in your 20’s and feel that your whole life is ahead of you. It certainly is, but you definitely want to start making smart money moves early to make sure your future is taken care of later on. This way, no matter where you end up in life, you know that your future is well taken care of. Read on for the ten steps you need to start taking now to make sure your future is set.
Financial Planning is Crucial
It may seem daunting to come up with a life-long financial plan, so start off by making a five-year one. Think about where and how you can get to where you want to be in the next five years. Then break this down into monthly goals that you know you can stick to easily.
Retirement Planning – Start Now
Retirement seems far, far away. But starting early will ensure you have what you need when you do retire for good. Does your employer offer a 401(k)? Make sure you take advantage of it if they do. If you do not have access to one, open up your own IRA and start contributing to it today.
Save, Save, Save
You want to set aside cash for other financial goals, as well. This may be money to buy your own home or real estate in the future. Saving cash will help you knock off a lot of interest when you do make a big purchase. You can also save money for capital if you have plans to start your own company at some point.
You really never know when an emergency will happen. Your job of five years may suddenly lay you off, or you may end up in the hospital for months at a time, causing you to lose work. If you are living on your own, keep an emergency fund of at least a year’s worth of your current expenses to cover you if you need it.
Climb the Career Ladder
Don’t get stuck in a job that isn’t moving you ahead. Focus on climbing up the ladder in your career by defining clear cut goals for yourself and focusing on what needs to be done to reach them. You may have to move, switch companies or go back to school for additional classes to do so, but the end result will be worth it.
To manage your money properly, always stick to a budget. Just because you are single right now doesn’t mean that you won’t benefit from one! Figure out what you can spend on luxuries while still sticking to the financial goals and plans you have set for yourself. You may find areas you can easily cut back on, allowing you to save even more money than you previously thought.
Pay off Credit Cards and Debt
Having poor credit could mess up a big financial step, such as purchasing your new home or starting a business. Pay down your debt while you can. Even late payments to bills and credit card companies can have a detrimental effect on your credit score. Fix up past mistakes and clear your credit report so that you are able to easily reach your financial goals later on.
Insurance is Important
Paying a bill for insurance can be frustrating when you aren’t using it right then and there, but insurance will protect you in the event something does happen to you. Health insurance will cover you when you are sick, renters insurance will help you replace things if you are robbed or your home is damaged, and disability insurance will help you if you do not have an emergency fund to fall back if you are hurt.
Buy Life Insurance
You may think that just because you are single with no kids that life insurance is an unnecessary expense. But you should at least have enough money to cover costs associated with burial and funeral expenses so that your family isn’t caught off guard scrambling to pay it off. You may also want to take a policy out on yourself to help your spouse or children get by in the event of your death.
Make Sure Things are in Order
You may think it is way too early to write up a will, but this is one less thing your loved ones will have to worry about if you pass away unexpectedly. Plan if you want a living will or DNR, whether you would like to be an organ donor or not, and what type of funeral arrangements you would like. Consider drawing up a paper with insurance information that will be helpful to those handling your affairs, especially if you have insurance policies that they are beneficiaries of.