Financial planning in life is more than month-to-month budgets and paychecks. There are four major milestones in everyone's life that require planning far in advance. Most of these should apply to you, and as a young adult, you should make every effort to think and plan ahead. If you do not, there may be some unpleasant financial trouble ahead for you.
If your own parents did not plan ahead for college for you, then you have to plan ahead for it. If they did pay for you to go to college, then you will need to plan ahead for college for any children you have. Either way, you should start at least ten years in advance for your own college fund and twenty years in advance for each child you have later on. Not planning effectively for college leaves you, or your children, with monumental debt that takes forever to pay down and eliminate, or worse, uneducated.
Your First Home
Your first home is a really big deal. Do you want to get a basic starter home and hope like crazy you can afford something better later on, or do you plan far in advance and save enough to buy a much nicer house from the start? Saving ten percent down for a home is tricky enough, even with ten years to save. Saving for a nicer home means scraping by and planning several years more beyond that decade. Lack of planning and creating a financial plan to buy a home means you have to settle for less, and you may just be in that home much longer than you want to be.
This is one thing many Americans report that they do not do--ever. Financial advisors say that you should have at least three to six months' worth of money stashed in a savings account in the event of an emergency, such as the loss of your house or major medical/health issue. This is your "survival of the fittest" money, and without it you could end up homeless, or worse.
The Social Security Administration reports that retirement benefits will be depleted by 2036 unless the government comes up with a way to keep the program going. That means that most people born in the '70s and thereafter will not be receiving government retirement benefits when they retire. It is the biggest reason why the government and financial advisors have been pushing Americans so hard to save and invest for retirement. If you cannot retire and have to work beyond the age of 67, how will you manage with age-related health issues? Retiring requires a lot of money and skilled financial planning.
For more tips, talk with a financial planner like those at Trajan Wealth.