So the last few years might have been a bit intense for you. You worked your buns off making sure your bills were taken care of, that your student loans were paid on time, and ultimately figured out what you wanted to do with your life. There might have been major changes for you, too: maybe you got married, moved to a different city, or got a big promotion. If you have a greater handle on things and feel more like a grownup, you may be thinking BIG PICTURE. You may have life-changing goals such as going back to school, buying a home, or starting a family. But what about having the financial building blocks and tools to help accomplish those goals? Here’s why credit, insurance, and estate planning are super important for your financial future and what you can do to get started:
Building good credit is essential in your life as a consumer. A poor credit score will make it more difficult to secure a loan for a car, or a mortgage, and you’ll probably be approved for loans with higher interest rates, thus paying more for the same thing. Why would you want to do that, right?
How to get started: Chances are you already have some experience with building credit with a credit card or student loan. A great place to start is by ordering a credit report and checking for errors. You can order one for free each year from AnnualCreditReport.com. To build good credit, make sure you pay your bills on time. If you can swing it, make an extra payment. You can also look into adding to your current mix of credit to up your score.
Crystal balls and oracles might make you believe otherwise, but we all know there’s no way to predict the future. And although it can drudge up unpleasant feelings and make you think of the inevitable, insurance is there to protect you, your belongings, and your loved ones in case of the unexpected. Types of insurance you may want to get include renter’s insurance, life insurance, and long-term care insurance. Know that life insurance isn’t just for people with families. If you’re single, it can help cover funeral expenses and pay for outstanding loans.
How to get started: At least once a year spend some time reviewing your current policies to make sure your current plan is a good fit for you. Especially if you’ve had some life changes in the past year, such as getting married, having a baby, purchasing a home, or starting a business. If you’re shopping for new insurance altogether, Karen Carr, a CFP® with Society of Grownups , recommends doing your research and understanding the lingo. “Doing some general research upfront can help you make a more informed decision once you start shopping for policies,” Carr explains. If you’re a member of a credit union, you may be eligible for member discounts on insurance. Reach out to your local branch to find out what discounts might be available.
You may be thinking, “Do I seriously need to start thinking about putting a will together now?” While it’s definitely not the most fun thing to think about, similar to insurance it’s something to consider if you’ve recently experienced big life changes. With estate planning, you’ll not only create a will, but designate beneficiaries, a power of attorney, and how your social media accounts will be handled after you pass. You’ll need someone to take care of all those selfies and mini-rants on Twitter, after all.
How to get started: Matt Becker, a fee-only financial planner and founder of Mom and Dad Money, suggests checking out estate planning software that explains what you need, why you need it, and how to get it. “Use that information to call a few local estate planning attorneys and ask them whether they typically work with people in your situation and what they charge for the specific items you need,” says Becker.
While not the most exhilarating things to think about, credit, insurance, and estate planning are major steppingstones in “adulting.” By looking into these kinds of things now, your money matters will be that much better off in the long run. Your future self will thank you.