It’s easy to forget about financial planning when you’re young. This is especially true if you have a ‘live in the moment’ attitude or, like many of us, don’t consider it the most exciting subject matter.
But financially planning for your future is necessary in order to create a fulfilling, stable, and secure life for your coming years ahead. The younger you start, the easier it is to fall into financial habits that serve you well for life.
If you’re a bit directionless regarding where to start, the below four goals to reach by the age of 35 should provide some inspiration.
- Evaluate your life insurance needs
Life insurance is never on the top of any young person’s agenda, but it’s the younger crowd who can reap the most benefits from investing in an insurance policy. If you haven’t even considered the option, it helps to ponder what your future has ahead. Most young adults plan on getting married and having children at some point in their future, and naturally as they start having dependents in their life, they gravitate towards life insurance.
You’ll save your future self a lot of money by investing at an early age because the younger demographic is seen as a low risk to insurance companies, so you can acquire low premiums for years. Since the future is always uncertain and there is the possibility that illnesses or disabilities could develop as you age, grabbing a life insurance policy when you’re young and healthy is a smart decision for your future.
- Build a strong credit report
Building a strong credit report is important for many areas of your future; landlords use it to determine if you’re a good candidate for housing; employers use it as an indicator of your character; and banks use it to see whether or not they’d be taking a risk by giving you a loan.
By the time you’re in your thirties, you may be looking to buy property, and trying to get a home loan with poor credit can be a discouraging process. To avoid the hassle and regret, start handling your finances responsibly now by making your credit card payments on time and handling any debt you owe with care.
- Start saving (really saving)
Saving can make or break your future plans, so be intentional about putting money away for the coming years. This means you’ll have to go further than simply tucking away a few dollars here and there for a luxury item you have your eye on. It’s about planning for events in your life that will have a significant impact on you such as retirement, marriage, education (for you or your children), housing, or even simply preparing for a rainy day.
Get in the habit of setting a specific amount aside each month after you subtract your set expenses, and don’t stop until you have enough to live off for a couple years. This might seem extreme, but your life could really benefit from an emergency fund if you experience an unexpected period of unemployment, loss of shelter, or a sudden desire to relocate.
- Document a written financial plan
A vague idea of what financial expenses your future holds will give you a good idea of how much to save. But when it comes to dealing with money, it’s the details that make the biggest difference. To help determine how much your forthcoming years are going to cost, document a plan of the things you’re going to need and want: over the next week, month, year and even decade.
Having your plans physically written down will help you stay motivated when it comes to making smart financial choices. While you’ll have to leave room for inflation and changes in the economy, it will give you a good idea of where your savings should be on a regular basis.
Even though getting your finances in order might not be the ideal way to spend your remaining days of youth, putting it off now can prevent you from reaching your goals later on. With a little bit of planning and forward thinking, you’ll create a future where you have moments full of monetary stability and peace, instead of struggle and stress.