When you’re in your 20s or early 30s, retirement seems far away. If you’re in good health, you may feel that there’s no need to start planning your estate this early; however, it’s never too soon to start estate and retirement planning.
First, you should create a budget if you don’t already have one. Determine which regular expenses are necessities. Subtract this number from your income.
What you have left is money for you to enjoy and plan for your future. Ideally, you should bank 5% to 10% of your income for retirement.
Consider automating a designated amount to go from your check each pay period. Additionally, it could help to have multiple accounts — one checking, one household savings, one retirement, for example.
Investing is a way for your money to increase in value without you having to do much. While this money could be extra income for you, investing is also a way to plan for retirement.
The stock market offers dividend-paying stocks, which payout a small amount of money regularly. These aren’t as risky as other stock options.
Another option is adding money to an Individual Retirement Account (IRA). With this particular option, you can invest up to $6,000 each year without paying taxes on the money. You earn higher interest than you would with a standard savings account, as long as you don’t touch the money for a designated period.
At all costs, you want to avoid debt. It’s a trap you can easily get sucked into, which costs you. Not only are you committed to a monthly payment, but you’re also paying interest and late fees.
For example, instead of racking up $5,000 in credit card debt because you desire new furniture, save your money until you can afford the items.
As a general rule, you should pay your credit card in full each month to avoid fees and debt.
When you’re budgeting, separate your needs from your wants. While you might be able to afford that daily macchiato, it may cost you more than you realize because it could be money saved.
The same goes for your cable bill. Cheaper alternatives exist besides the most upgraded cable package, including ditching cable altogether for a streaming service.
As you’re planning your estate, you should have a handle on your assets. Know how much money you have invested in stocks, bonds, money markets, 401k, etc.
Don’t forget to factor in your home when calculating your assets. Make sure you subtract the amount you owe on the house from the value for the most precise home equity figure.
Life is unexpected, and you don’t want to leave your loved ones fighting over your property or unsure of what to do in the event you can’t make financial or medical decisions. Make sure you have a will and delegate a power of attorney (POA).
It doesn’t matter how old you are today; start planning now. Discover how Katje Law Group, serving Anaheim and the nearby