Guest Article by Christopher Haymon. Read more from Chris at Adulting Digest.
While you might think it's too soon to begin estate planning when you're in your 20s and 30s, being proactive in this area can help ensure you're on firm financial footing throughout your adult life. This can help reduce stress and anxiety that's often associated with money management and help protect your family’s assets over the short and long-term. Schroeder Law Group can be your partner in charting the best path toward financial independence.
Take Care Of Legal Needs
It’s wise to establish a will that outlines your wishes and your bequests in the event of your passing. This is especially important if you have minor children and need to arrange for guardianship. A living will and advanced directives can also be a way of legally protecting your wishes with regard to your personal care, should you become incapacitated. Power of attorney grants the decision-making rights to someone you trust in the event you are unable to make those choices on your own. Many people choose to entrust these rights to a parent, if unmarried, or a spouse if married.
Maximize Retirement Contributions
If you work for a company that has a retirement program, you're well advised to maximize contributions in your 20s and 30s and beyond to ensure a solid base you can build on throughout your career. You may also opt to explore something like a Roth IRA, mutual funds, or other independent savings plans, retirement accounts, or even college savings plans for your children. Setting aside or investing small amounts in young adulthood can pay big dividends down the line. Arranging for automatic deposits can make it easy, and keep you on track for achieving your financial goals.
Manage Your Money Well
In addition to retirement planning, Dough Roller says creating and living within a household budget will help ensure you're protected against potential financial pitfalls. Living within your means and resisting the urge to run up high interest debt can help maximize your buying power when it comes to making investments or large expenditures, like vehicles and homes, while keeping you on track for your objectives. You can retain a financial advisor or use a do-it-yourself software program to aid in your budgeting and savings efforts.
Monitor Your Assets
Keeping track of your investments is important to long term financial solvency. You can calculate the value of your assets yourself, or hire a pro. This move will help ensure you always know where you're standing with regard to expenditures, investments, and savings. For example, if you own a home, you can determine home equity by subtracting the amount you owe on your mortgage from the current market value of your property. This essentially lets you know the monetary value of your home at any given time. Your employer likely has a portal for monitoring your retirement account, and if you have other investments, reviewing regular statements can keep you in-the-know.
Protect Your Credit
Your credit report is a reflection of all of your financial activity, including loans you carry, credit cards you utilize, the balance on each line of credit, and the timeliness with which you regularly pay down your debt. Your debt-to-income ratio is the amount of money that you have relative to the amount of debt you carry. According to Experian, all of this impacts your credit score, which is something lenders use when determining your credit worthiness and interest rate when you apply for a loan of any type. Credit monitoring can help alert you to any fraudulent activity in your name, as well as help you track how potential lenders see you.
It's never too early to start making educated decisions about your financial future. Getting an early start will help ensure you have emergency savings while you’re young, and a financially comfortable and enjoyable retirement down the line.
Schroeder Law Group can provide comprehensive solutions for all of your legal needs. Reach out today for a free consultation by calling (937) 886-4563.
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