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Three Things 20-Somethings Can Do Right Now to Better Prepare for the Future

Monday, February 26, 2018

If you’re 20-something, there’s a good chance that you don’t quite feel like an adult yet (even though you are). As far as life planning goes, however, this is the time in which you’ll make or break your future. Here are some things you can do right now to ensure that future is brighter.

If you can afford it, consider buying a home
There are so many benefits to owning a home vs. renting - especially for a younger person or couple. For starters, you’re building equity every time you make a mortgage payment. When you think about it, this is basically forced savings. In today’s market, real estate is a safe and sound investment as long as you don’t buy above your means. On top of that, home ownership gives you access to various tax breaks.

The benefits of homeownership stretch far beyond money, however. As a homeowner, you have a lot more sway in the goings on of your local community and the decisions made by councils and associations that affect you (and your eventual children). Owning a home can give you more say and influence in decisions that affect local road, building and even school developments.

Begin saving for retirement today
Yes, retirement is a long way off and yes, you may think you need the money now. But investments grow exponentially, meaning the earlier you throw down a principal nest egg, the more interest it will have earned by the time you’re ready to retire. As soon as you can, you should start putting at least 10% of your salary into some sort of retirement account. If your employer offers a 401K program (and especially if they provide some sort of match for your contributions), that’s where you should stash your cash. If not, consider a Roth IRA. As CNN Money suggests, any leftover savings funds after you’ve maxed out your retirement account should go toward a safe investment vehicle like index funds.

As you work toward retirement, be sure to prioritize self-care too. Not only will this improve your health and wellbeing, but it can help with savings. The repercussions of partying too much, constant snacking, or neglecting exercise can lead to health issues such as alcoholism or chronic disease that are costly to treat. Your 20's are a time to explore and have fun, but don’t overdo it. Set the stage for a healthy future now while putting the extra savings toward retirement.

Start preparing for kids before you have them
If you’re 100% sure that you’re not going to have kids, it probably doesn't make sense to prepare for a future where kids are a big part of your life. But the vast majority of people in their 20s will have at least one child before they hit 35. You should start thinking about how to prepare financially for that child as early as possible.

If you think you’re close to having a kid, you can begin to save for early expenses. If you think a kid is years away, you should still start saving for one big expense: their education.

There are different ways to save for college; including 529’s, Coverdell and UGMA/UTMA Accounts.  529 College Savings Plan are becoming a more popular tool for families since it’s an investment plan where funds grow tax-free if used for college expenses.  You should also update any existing end-of-life documents to reflect a new addition to the family, like your will and life insurance policy.

The best time to start planning for your future was yesterday. The next best time is right now. It’s difficult to think about what your life is going to be like next year - much less what it will be like in 40 years. Despite this, most people’s futures are dependent on security, and you can only get security from investing in that future from an early age. Don’t arrive at middle age saddled with a bunch of woulda-shoulda-coulda regrets.

Freelance Contributor: Daniel is a single dad raising two children. At DadSolo.com, he aims to provide other single dads with information and resources to help them better equip themselves on the journey that is parenthood.

Photo Credit: Pixabay.com


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