Are you at that crossroads between college or graduate school and responsible adulthood? For most, the point arrives somewhere between the ages of 22 and 30, and it can be a life-changing experience when you fully realize all the serious responsibilities that come with the title of adult. Aside from emotional aspects like finding a life mate, deciding whether or not to have children, and making yourself employable in a career of your choosing, much of adulthood is related to money, how you earn it, what you do with it, and whether you make plans based on future income. What are the four most common expenses you’re likely to face as a full-fledged adult? Here’s a summary that might help you plan for the oncoming life transition.
Buying a First Home
For centuries, one of life’s rites of passage has been acquiring a residential property and a small plot of land to go with it. In olden times, those plots were farms. Today, they’re yards, but still require plenty of maintenance. Once you leave the parental nest and get a place of your own, chances are it will be an apartment. While convenient, apartment life is expensive because you build up no equity by paying rent to a landlord. Eventually, the time will come when your credit and income are in good enough shape to purchase a home. Try to do so as early as possible in order to avoid wasting money on rent.
College For Your Children
Sending kids to college, and helping pay at least some of the related expenses, is something you might not face for twenty years or more. If you plan to start a family someday, it’s smart to think about how to pay for a child’s college education right now. If you want to finance tuition for your child, there are several options. One of the best is called a Private Parent Loan. They work in a unique way because the student has no obligation at all. The parent is the one who borrows, and owes, the money. These low-rate loans are a smart way to not only pay for school expenses but let students focus on their studies without having to worry about being over-burdened with debt the minute they graduate.
Single people under the age of 50 can shield up to $6,000 per year from income tax by placing the money into an IRA (individual retirement arrangement/account). If you’re just starting out, $500 per month might not be a realistic goal, but be sure to put some percent of your monthly income into an IRA as soon as you begin working. The power of compound interest works in your favor even if you can only set aside a small amount. Get in the habit of saving early, and the long-term rewards will help you live a comfortable life in retirement.
There’s more to life than a house, a college fund for the kids, and a retirement account. Try to obtain enough of the right kinds of insurance to prevent financial disasters. They include homeowners’ policies, medical/dental coverage, life insurance, and car insurance.