Speaking frankly about money can be intimidating for some and boring for others. Whether you love or loathe balancing your checkbook and creating budgets, you can’t escape dealing with dollars. Life doesn’t come with instructions, but thankfully there’s sound financial advice to help you better manage life’s major milestones.
Graduation Greenback Advice for recent college graduates
Congratulations, grad! We know you’re still celebrating (you deserve it), but it’s time to start thinking about your new life. They don’t call it commencement for nothin’.
You probably won’t get a financial aid refund check or an allowance from your parents now that you’ve graduated, so it’s time to act accordingly. If the salary of your first job right out of college is lower than you expected, or if you’re still searching for one, then cut back on unnecessary spending like buying takeout and new clothes. You’ll also want to create and follow a realistic budget.
If you’re fortunate enough to find a job with benefits like a retirement plan, make sure you take advantage of it. Retirement might seem a lifetime away, but it’s never too early to start preparing for the inevitable. Edward Jones financial adviser James P. Hilty Sr. recommends that recent grads contribute as much as they can to their company’s retirement plan and take advantage of company matching. It’s also a good idea to open up a savings account if you don’t already have one.
“One of the greatest things you can do is pay yourself first,” Hilty advises. “The earlier you start, the better.”
OK, let’s talk about the financial issue that’s probably on every graduate’s mind: paying off those student loans. According to American Student Assistance, about 60 percent of American college students borrow money to help fund their education, so chances are you’re one of them. Start paying down those loans as soon and as fast as you can before you have other financial obligations like a mortgage and children.
Wedding Wealth Advice for newlyweds
Did someone ring wedding bells? Cheers to you and your new life partner! While you’re eating leftover cake, pull up a chair for your spouse and have a chat about finances.
Hopefully you two lovebirds have already discussed individual debt (car, credit card, student loans, etc.), credit standings, investments and other humdrum-but-important financial topics. Serious couples should also discuss financial goals and attitudes toward money and savings.
Now that we’ve got that out of the way, it’s time to determine where you’ll keep your money. Forbes.com recommends having a joint bank account for shared bills like rent or mortgage and separate accounts for personal expenses like gifts. It’s also a good idea to pay off debt while you build an emergency savings fund for unexpected events such as car or home repairs.
Domestic Dough Advice for first-time homebuyers
No more lousy landlords… You’re on your way to owning your own pad!
Before you make a down payment, even before you start mentally decorating your new abode, realize that owning a house is expensive. Calculate all of the costs associated with home ownership like mortgage, taxes and insurance to determine whether you can cover these each month. If you can, pass go and collect $200. (What’s financial talk without a little Monopoly humor?)
Now the home search begins. Unfortunately, purchasing a home isn’t as easy as those HGTV shows make it look. You’ll need to do some investigating to see whether you can take advantage of financial resources like a Federal Housing Administration (FHA) loan or whether you’ll be receiving assistance from a family member. (Be aware of tax rules regarding “gifts.”)
If you want to get some bang for your buck, look into buying a foreclosed home. According to Business Insider, Marion County and the surrounding areas have one of the highest foreclosure rates in the nation, so buyers can take advantage of lower prices. The process can be a little tedious, but you could potentially save a bundle in the end. Also, be aware that the term “short sale” is a misnomer and dealing with the bank handling the sale could actually take many months.
Wherever you choose to live, be aware of the property taxes associated with the area. The differences in tax prices can be in the thousands—that could easily add hundreds of dollars a month to your mortgage.
Baby Bucks Advice for new parents
Endless diapers, midnight feedings and constant worrying—you do it all for your bundle of joy. We know you don’t have a lot of time to even think about doing something other than looking after your little one, but we’ve got important money matters to discuss.
Although it might be hard to think about death at such a glorious time, one of the first things a new parent should do is purchase or update their life and disability insurance coverage. Parents should also update their wills to include a guardian for their child in case something tragic happens.
Parental instincts might make it difficult for moms and dads to put themselves first, but Forbes.com recommends that parents pay off debt and make sure that they can save for retirement before they start to put money away for junior’s college education. After all, it will be easier for your child to receive a loan, grant or scholarship for college than it will be for you to receive that same level of financial help during retirement.
Once you’re able to start saving for your child’s college education, research different plans to determine what’s right for you. Hilty says it’s important for parents to know the difference between plans such as 529, which are strictly used for educational expenses, and custodial accounts that don’t have to be used toward your child’s education.
Every new parent can use some extra dollars, so read up on tax breaks like the Child and Dependent Care Credit, the Child Tax Credit and exemptions for dependents. Another way to pocket some cash is to not spend it, which includes not keeping up with the Joneses when it comes to new baby gear. Often, there is no need to go out and buy the latest, greatest stroller or baby swing. Instead, try less expensive alternatives (or maybe even borrow gear from a friend) and use the extra money to pay off debt, save for retirement or contribute to your little one’s college fund.
Retirement Riches Advice for new retirees
You’ve worked hard all of your life, and now it’s time to sit back and enjoy the fruits of your labor. Speaking of those fruits—let’s make sure that you have them in order.
According to the Centers for Disease Control and Prevention, the average American can expect to live until 78 (76 for men and 81 for women), which means you should plan to live off of retirement savings for at least 12 years if you stop working at full retirement age. Of course, chances are you could live much longer than average.
“Most people could retire on 65 percent of their salary” Hilty says. “But you should target between 80 to 100 percent.”
One of the first major decisions you’ll likely encounter upon retirement is how much money to withdraw from your retirement savings each year. Although that percentage will vary from person to person, Forbes.com states that you should “assess your time horizon, asset allocation and potential changes in investment returns when determining your withdrawal rate.”
Another financial decision you’ll likely run into is how to handle your social security benefits. Knowing the right time to receive social security payments is important, as how much you receive is affected by the age you choose to start receiving.
Even if you’ve spent your whole life planning for retirement, there’s no way to predict the future. When making financial decisions, take into consideration such events as chronic illnesses or the need for an assisted living facility, both of which are very costly. Also, don’t forget inflation—your dollar isn’t worth what it used to be!
“Make sure you can prepare for unexpected things,” says Hilty. “They will happen—guaranteed.”
LIFE LOOT Advice for adults over 70
Just because you’ve lived a long, celebrated life doesn’t mean that you can stop thinking about finances. That’s right, we’ve still got some things to discuss.
One uncomfortable truth you might have to face in your later years is the loss of your spouse. Although this is no doubt a difficult time, there are certain financial matters you will have to handle while grieving. For starters, The New York Times suggests that you keep up with your bills, collect life insurance and understand your late spouse’s health insurance policy within the first few months following your partner’s death. Additionally, it may be helpful to hire a competent financial adviser to assist with monetary issues you may not understand.
It’s also a good idea to be aware of available financial support. Do some research to see if you qualify for Supplemental Security Income (SSI), an increase in Veteran Affairs benefits or some other state and/or federal assistance programs. With all of the confusing parts of Medicare, that’s also a program you’ll want to stay on top of. Make sure you understand premium costs, what is covered by the insurance and the free preventative care program you can take advantage of (among other important things). Hilty also suggests keeping an eye on any supplemental insurance might you have, as Medicare only covers 80 percent of medical expenses.