When you were a kid, you probably didn’t give much thought to finances besides your allowance and your lunch money. Paychecks were those things your parents talked about. Credit cards were those things your mom pulled out at the store. Mortgages and loan repayments, stocks, and investments – those topics were for grown-ups.
Only now you’re grown-up. Life comes at you fast and managing it can take some work. But it’s worth putting in the work because it means you’re working towards your future. You are building something for yourself. Before you know it, you’re #Adulting.
Let’s look at our 5-step guide to successful #Adulting:
1. Create a Budget
First things first. Ideally, you don’t want to be spending more than you’re bringing in. And you want to know how much you’re spending and how much you’re bringing in. The days of balancing a paper checkbook are long gone, but even in today’s world of e-payments, the idea is essentially the same. Whether you’ve just landed your first job out of college, working your way up the career ladder, or balancing a series of gigs, you need to be aware of how much you’re taking home each pay period. Next, figure out what your monthly expenses are. Create a budget for necessities and then any extras.
Make a list of all your expenses: rent or mortgage, taxes, utilities, health insurance, phone, internet, cable, streaming services, subscriptions, car costs, etc. If you’re over budget every month, review your list and see where you can cut costs. Investigate second and third streams of income.
Watch out for late fees, overdraft fees, and additional costs that can cut into your budget. Setting up autopay for bills can help you get them paid on time. Getting alerts for your checking account can help you steer clear of overdrafts. And shopping around for subscriptions and internet/streaming services can help you get the best deals available.
2. Start Saving Now
You’re never too young to start saving. Paying bills is part of adulthood, but if you’re able to save part of each paycheck, or put away a set amount each month, you can build up a savings account to be proud of. Putting money into an employer-matched 401K or an IRA account also allows you to start preparing for retirement early.
Saving isn’t always the most exciting part of money management, but whether it’s saving for a down payment or to have an emergency fund, when you do need it, you’ll be glad your nest egg is there.
3. Invest…and Diversify
We may have budgeting and saving down, but is that it? Don’t forget about investing -- growing your money and watching it work for you. Once the basics are covered, you’ll have room to invest. Real estate, stocks, cryptocurrency – or anything you can put your money into and have a chance of a greater return – might be a good idea. Pew Research Center reports that over half of American households have investments in the stock market, for example.
Once you’re investing, take the next step to diversify. Diversification means not putting all your eggs into one basket. You might own stock in multiple companies or have a variety of saving and investment accounts. Find the sort of investment options that are right for your life.
4. Set Goals
Everyone wants to be financially successful, but financial success looks different for every person. Determine what your goals are and take measures to reach them. Do you want to reach a higher income bracket? Get a promotion? Have a source of passive income? Retire early? Buy a house for the first time? Pay off your home? Get those student loans paid off?
Define what your financial and personal goals are and what you’ll need to do to achieve them. If you’re married or have a partner, talk about your mutual goals and the individual achievements you want to work towards. When you accomplish one goal, think about what’s next.
5. Create Your Estate Plan Early
When you’re starting out in life, Estate Planning is probably the last thing on your mind. But it’s really never too early to start getting your affairs in order. Estate Planning, at its core, is pretty simple: it means taking charge of what happens to anything you own and looking out for the people you care about.
Creating an Estate Plan can let you take control of:
Future medical decisions
Future financial decisions
Your bank accounts
Your children’s well-being
Your spouse, boyfriend, or girlfriend
And, basically, anything that life can throw at you. Estate Planning is the ultimate act of being prepared. Creating Estate Planning Documents will usually involve A Will and/or a Trust.
If you’re 18 or older, you’re an adult. You can make your own decision. That means medical, financial, you have the say. Until you don’t. In the event of an accident or illness, you might temporarily be unable to make those decisions. That’s where Estate Planning comes in.
If you’ve made a Will, you’ll have given someone your power of attorney. That gives that person the right to make those important decisions for you while you’re unable to. A Will also covers what happens to any property you own. If you’re a parent --- don’t wait to create a Will. It will allow you to appoint guardians for your child if you can’t care for them.
Making a Trust can make transferring property and money easier. You can create a Trust along with a Will, or you might need to make a Trust when buying or Transferring property, being gifted property, or starting a business. Click here to read more about the differences between a Will and a Trust and which one is right for you.
At Trust & Will, we can help you get some of those adult financial decisions taken care of. Our Online, State-Specific Estate Planning Documents can let you create a customized Will or Trust and take control of your future. Contact us now to get started.