Young Money: I guess this is growing up
blog by Caitlin Campbell McNulty • November 28, 2012 @ 12:12pm
I have officially become an adult. Now, I’m sure many people would say that when you graduate from college, or get your first “real” job, or stop depending (do you ever?) on your parents for financial survival is when you become an adult—but I’m not as sure that I agree. Living on my own, starting my third big-girl job and, honestly, even getting married didn’t make me feel like an adult as much as buying a house and making certain life decisions over the past year has.
As we get older, more mature and move out of our early 20’s still-in-college lifestyle, there are some things that every young professional needs to consider. Here is a list of what I think are must-do’s for young professionals as we grow older.
1.) Insurance. I’m talking about all kinds of insurance, not just health—but you’d better make sure you have health insurance, too. I know, I know, it’s expensive and doesn’t cover a whole heck of a lot, but when you’re having emergency surgery on your appendix you’ll be glad that you don’t have to pay for your hospital stay on your own. At the very least make sure you have catastrophic coverage.
Another type of insurance that young professionals should really consider is life insurance. No one wakes up thinking “today’s a good day to die,” and most certainly don’t wake up thinking it’s a good time to purchase life insurance, but you should. Life insurance protects you from the unexpected and provides for your family in the event that something tragic happens. Life insurance is not expensive on a monthly basis and can provide you with piece of mind that things will be taken care of long after you’re gone.
2.) Estate planning. Estate planning is more than just a will. My husband and I recently sat down with an attorney and went through a whole estate planning package. This process was much more involved than I ever imagined and I’m so glad we took the time to talk about some of the things that were included. Besides a basic will, we filled out a health care proxy, designated power of attorney, made our burial wishes known and completed a living will.
Morbid? A little. Necessary? Absolutely. No matter what happens, I know that my wishes will be followed.
3.) Investing. Pensions are a thing of the past and Lord only knows where social security will be when it’s time for us to retire. Investing now is absolutely key to ensuring you’ll maintain the lifestyle you’d like after retirement. It will also allow you the freedom to retire when you’d like as opposed to working until you’re 80 just to pay your bills. A good advisor will discuss your financial goals with you and develop an investment strategy that will help you reach them without putting you into poverty now. Starting early will also allow you to be a bit more adventurous with your money, which could pay huge returns.
4.) Saving for emergencies and rainy days. Everyone should have a rainy day fund with enough money to cover basic expenses for at least a few months. Keep in mind that basic expenses are rent/mortgage, utilities, groceries, etc. They are not bar-hopping, shopping and going to the movies. With the economy still shakily recovering, having money set aside can give you peace of mind that you will be able to keep your head up if something unfortunate were to happen. This should be money in an account that you never touch and barely have access to. This way, you won’t be tempted to use it for those killer pair of shoes or for that delicious dinner at Mike A’s. If you borrow from the fund without replacing the money, you defeat the purpose and won’t have it when you truly need it.
I know it can be overwhelming to think about taking care of all this when you look at it from the 20,000-foot view, but don’t let it bring you down. I found that by breaking things into pieces and accomplishing them one at a time made the process much easier to manage. You’re not going to check things off as efficiently as people say you should—heck I’m still working on the last two on my list— but if you keep plugging away, you’ll know that you’re ready and prepared for everything.
Photo from Flickr / joshchandler.