You’re 25 and feeling alive. You’re settling into life after university, paying off your debts and slowly figuring how to “adult”. But with the responsibility of bills, rent, and even keeping up social appearances, prioritizing financial planning is something far too often pushed to the side. Of course the nagging idea that maybe starting a 401-K might not be the worst thing, however it’s hard to fully take control of your financial future when the reality of everyday life is living paycheck to paycheck.
If you’ve ever played the Game of Life board game, it becomes clear that compressed into the colorful path there are various stages of life. Each stage holds its own major financial challenges as well as prospective profits in addition to surprises (new baby!) and forks in the road. In the real world game of life, much is the same, but with sound financial planning throughout the different stages of life, you can have much more control over how much you retire with (as opposed to those random tiles you collect throughout the board game).
When people warn you that having kids is expensive, it’s no joke. From diapers to food, braces to sports activities the costs add up quick. For a middle-income family in the U.S. raising a child up until age 18, costs an estimated average of $245,340 (or $304,480, adjusted for projected inflation), according to the 2013 “Cost of Raising a Child” report from the U.S. Department of Agriculture. Of course, this number fluctuates dependent on where you live and your living habits.
Ask anyone and even if they don’t know a thing about investing they’ll say, “oh, real estate is a great investment!” Well, it can be if you approach it in a smart way that works for you and your financial situation. To illustrate the high attractive level of real estate compared to other income return sources, consider that private market commercial real estate saw an average return of 8.4% from 2000 to 2010 (that even factors in the bubble burst of subprime mortgage loans!)
Think back to those early days in life when it seemed like everything in the candy aisle was free if you begged your parents hard enough. Not a fleeting thought was given to the expenses of a vacation or the copay costs at the doctor. There’s something beautifully unburdened in the way which children experience the world: recklessly present and innocently ambivalent. Teaching your children lessons about money from a young age won’t crush that. What it will do is to set them on a path to future financial success with enduring financial concepts.
Now that the ball has dropped on New Year’s Eve, we've dug up our hopes and dreams and made some resolutions. Getting back in the gym, losing weight, and eating clean, are usually at the top of the list, but what about your finances? The health of your accounts, spending habits, and investments are just as important to evaluate. When it comes to your financial resolutions this year (and beyond) use these tips to actually keep and reach your goals.
Here’s a thought: retirement doesn’t mean the end. It doesn’t mean an end of self-importance or purpose, it just means a new chapter—a paradigm shift of what life is beyond long days and meetings and bosses. Unless you own your own business, and even then, you are not your business. You’re not solely defined by the question, “What do you do?” But, it doesn’t mean you should stop defining the answer for such an inquiry in your retirement era.
Life is full of risks, and people make decisions everyday that require weighing those risks against their ability to protect themselves using their own resources or by transferring the risk to an insurance company. Most people realize that they couldn’t afford to rebuild a damaged home or buy a new car without insurance. While these are important and expensive assets, the actual risk of loss pales next to the loss of their biggest asset, their ability to earn an income.
Answer this riddle: what’s the one thing that will eventually happen to everyone, but generally, no one wants to discuss? Death is a subject that immediately conjures up all sorts of emotions because, let’s be honest, the absence of being IS emotional. But, death is also cause for practicality. It’s a cause for stating clearly what to do about money and property so there is no dispute or cause for fights between family members claiming rightful ownership. (We’ve all seen movies and TV shows where that happens and it never ends well.)
Let’s state up front that you don’t need a credit monitoring service to stay on top of your credit status. For people who are diligent and deliberate in monitoring their own credit, they can do so by accessing a free credit report from each of the credit bureaus once per year. And, for the credit monitoring critics who will tell you that these services do little to actually prevent identity theft or credit fraud, let’s concede that they are right. But then, nothing except the precautions you take up front can protect you from determined identity thieves.