Getting older is inevitably a part of life, and for most people, the journey is incredibly fun. You are able to have more flexibility and opportunities to make your own decisions. You enter into new chapters of your life that are filled with big, exciting changes.
Not to mention, we get a little bit wiser with every year that passes. But becoming an adult also comes with its fair share of responsibilities, especially financial responsibilities.
Here are five financial considerations now that you have become an adult.
Shopping For Car Insurance
Gone are the days when your parents paid for your car insurance. Becoming an adult means you will have to start shopping for affordable and reliable car insurance for your vehicle. We sometimes try to cut costs to save us money, which means we have less coverage or are working with a company that doesn’t care much about its customers.
In case you are in a car accident, for example, you may need to work with a personal injury lawyer who understands insurance companies. According to Gibbs and Fuerst, you want to work with an insurance company that is going to put their customers first, even if it may cost you a bit more in the immediate future. If something bad were to happen, you would want to make sure you are covered to avoid major costs in the long run.
Saving for Retirement
Whether you have decided to head straight to work after high school or are going through the higher education system, you will want to start planning and saving for your future. This doesn’t just mean planning for potential vacations or preparing to buy a house. It also means planning for your retirement.
You may not be considering this in your early twenties, but as the economy has shown, there is no time too soon to start saving. Financial considerations as we age are an important part of becoming an adult. Your job may provide retirement plans such as a 401k, but if you are an independent contractor or have your own business, you will need to set something up on your own.
There are several different options, such as a Roth IRA or Traditional IRA, that may work best for your particular financial situation. But solely relying on your savings account will not be enough. This may also entail learning more about portfolios, alternative investment strategies, or even the semi-confusing world of the stock market.
It may require you to work with a financial advisor through your bank or credit union to get you started. But setting aside a little money each month can make all of the difference in the long run.
Student Loan Payments
In order to boost your financial health as an adult, you will have to start clearing out some of your debt. Another payment you will have to start making once you have reached platform adulthood is your pesky student loans.
The types of student loans you have taken out or who you have borrowed from will affect your interest rates. It will also determine how long you have after graduation before you are required to make your first payment.
Many borrowers have also found that there are options to be able to defer your loan payments based upon your financial circumstances. We suggest speaking with your loan provider to see what options you have available if you are in a situation that might prohibit you from making payments.
Just like you have to prepare for the worst with vehicle insurance, you also need to do this with your personal well-being through health insurance. Many companies offer health care options to their employees. But similar to being an independent contractor or running your own business, you may need to find a way to obtain this on your own.
While it is no longer a requirement in the United States to have health insurance, it is something you will want to set up.
As someone in their twenties and thirties, you may think you don’t need to have health insurance because you are healthy, young adult. However, they don’t call it preventative care for nothing. Many health insurance plans offer free preventative care such as annual physicals or yearly dental cleanings. These are essential to make sure you are not missing any health emergency that could arise.
Mortgages and Other Home Expenses
Becoming an adult may mean moving from apartment living to buying your own house. Many people share the sentiment that it is better to pay a monthly mortgage than pay a landlord or apartment complex because you are investing in your future rather than throwing money away. While this is true, there are a significant amount of other expenses you will want to be prepared for when signing up to buy a house.
As a homeowner, you will have to pay for utilities such as trash, sewage, and water. You may be used to these amounts being included in your monthly rent. But with your own house comes your own set of responsibilities. This also includes handling any lawn maintenance, repairs, renovations, and snow removal you are unable to do on your own.
Not only this, but owning your own house also means you will have to pay home insurance, potential home owner’s association fees, and annual taxes. As you can see, there are certainly other responsibilities that come with buying your own house. However, it still certainly is a much better investment as an adult rather than renting every month.
After reading this, you may be thinking that becoming an adult comes with a significant amount of financial burden. While this can be true, there are ways to ensure that you are set up for success. Take a look at your overall budget. If you do not have one, it is time to set one up.
If you are still unsure, talk to a financial advisor who can help sort out your finances before you find yourself in a mountain of debt. You can gain control and have financial freedom. It’s all about being prepared.