Milestones for Money Management

Milestones for Money Management

On your way to developing and maintaining financial health, objective or comprehensive money management will play an important role. A solid financial plan can help you pursue or work towards financial independence for you and your loved ones. To start, accumulate emergency funds for a rainy day. Once you’ve saved three to six months’ worth of income, work toward developing short- and long-term financial goals, as well as strategies to meet them.

With your goals set and your plan in motion, it is important to regularlyreview your finances. When you reach a new stage in life, such as getting married, buying a home, or the birth of a child, consider the following issues:

First Job. When you obtain your first full-time job, you may be presented with an employer-sponsored retirement savings plan. It is never too soon to begin saving for retirement, and taking advantage of your employer’s plan as soon as possible will give your account the maximum amount of time and potential to grow. The combined effects of time and compound interest are powerful, and the sooner you start, the better. Try to contribute enough to your retirement fund to take full advantage of any employer-provided matching contributions.

Be sure to also learn about any insurance provided by your employer, including health, life, and disability insurance. If the insurance coverage offered through your employer’s benefit plan does not meet your needs, or if insurance is not offered at all, consider obtaining coverage independently.

If you change jobs, pay attention to these employer-provided benefits. Benefit plans may vary greatly from employer to employer, and changes in insurance coverage and retirement options must be factored into your personal financial plan.

Marriage. Weddings are special occasions that become cherished memories long after the bouquet has been tossed and the rice has been thrown. Marriage also creates financial changes. For example, you may consider opening a joint bank account, owning or purchasing property jointly, and sharing auto and/or health insurance. You may also want to begin saving toward the purchase of your first home and other shared goals, such as raising a family.

Obtaining and/or updating life insurance plans to reflect a name change, if applicable, and to include your spouse as your beneficiary can help ensure that financial goals will continue to be met. Review your retirement plans and goals to establish a savings plan to address or manage your retirement needs. Getting married will also most likely affect your tax situation. Research the most effective tax strategies for your short- and long-term goals.

New Home or Refinancing. Buying a first home is an exciting milestone. Now, the money you may have spent on rent can build equity in your own home. Whether you are a first-time homeowner or you are looking to refinance, research the various mortgages available to find the one that best suits your needs. Also, purchase a homeowners insurance policy to protect your home and its contents from covered losses. This is also an appropriate time to review life insurance policies to ensure that mortgage obligations can be met in the event of your death.

Children. With the added joy of a child comes financial responsibility. If you and your spouse are both working, you may need to plan for child care expenses, or you may perform a cost-benefit analysis to determine whether the income of one spouse could meet your family’s needs. Be sure to also consider your insurance coverage. Update your health insurance to include your child, and review your life insurance policy to ensure you have adequate coverage and add your child as a beneficiary.

For an infant, college is 18 years away. Yet, the sooner the family starts saving, the better. A college fund that has many years of contributions and earned interest is ideal. Children may also change your estate plan. Writing or reviewing your will becomes especially important to ensure your child will be provided for and suitable guardians will be named.

Starting Your Own Business. Leaving your job to start your own business can be an exciting adventure. As you assume responsibility for establishing, maintaining, and growing your business, be sure to consider the benefits that were previously provided by your employer. It is important to maintain retirement, disability, medical, and life insurance plans as you continue building financial independence in conjunction with a new business.

Retirement. Retirement is a time to enjoy the fruits of your labor. You may be considering relocating to a warmer climate and anticipating the adventures awaiting you. Your finances require attention as you seek to make your retirement dreams come true. Remember to maintain adequate health care coverage, and know your future care options. Proper planning can help preserve your hard-earned assets.

It can be comforting to know that you are financially independent and prepared for whatever life brings your way. Conduct annual checkups to assess financial goals, help provide for your loved ones, and build for the future. As you approach each life stage, you may find that additional planning can be well worth the effort.

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Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. Your results may vary.