Adulting is not an easy thing. One day, all you worry about is where to go for the next summer getaway. The next thing you know, you are calculating how much you will have left after you have paid all your bills. It is sometimes easy to get caught up in your daily expenses that you forget to prepare for life’s most significant costs.
People save money for a wide range of reasons: an overseas vacation, the latest smartphone model, or a spanking brand new car. However, there are other matters that you should not forget to save for. When you save for these items, you are setting your self for a more comfortable and financially healthy life. Saving earlier, while you have only yourself to fend off, can significantly benefit you in the future.
Here are some things that you should save for as early as now:
- Real Estate
You have two options: rent an apartment, or buy your own home. If you choose the latter, you have chosen a big financial step in your life. When purchasing a home, you should decide on your location. Do you plan on staying in that area for good? If you do, then you’ve got no worries. However, if you do not see yourself staying for long, then the first option is the smarter choice for you.
If you do decide to buy your own home, there are two things that you should prepare for: downpayment and the closing cost. The amount of downpayment that you will need to pay will depend on your mortgage. You can use a mortgage payment calculator online to get an idea of how much your rates will be. It will also give you a clear picture of how much you can afford. Save for a downpayment as early as you can. Paying for 20% of the price can give you better mortgage rates.
- Life Insurance
The younger you get life insurance, the cheaper your premium will be. Some adults in their twenties dismiss getting life insurance, only to realize its importance in their thirties or worse, in their forties. A life insurance policy is one of your biggest protection against life’s uncertainties. You can still benefit from a life insurance policy even if you do not get to use the death benefit part. It is a smart and sensible financial step that will give your family security should something will happen to you.
There are life insurance products that come with a saving or investment component that you can choose to withdraw once your policy reaches maturity. There are many life insurance products in the market that you can choose from based on your needs and your lifestyle. The sooner you get one, the better off you will be.
- Health Insurance
The old saying that goes health is wealth got it right. Good health is a precious commodity that you should not take for granted. As you age, your body might not be as healthy and as fit as before. Medical emergencies can set you back hundreds to thousands of dollars. Accidents can happen, so it is better to be prepared. Do not wait until you have experienced a costly trip to the hospital to get health insurance.
Retirement may be too far in your mind right now, but it is never too early to set up your retirement savings. Let compound interest work in your favor. The sooner you invest or save for your retirement fund, the lesser amount that you will need to reach your target retirement savings.
You can invest in special retirement accounts that can earn higher interests compared to an ordinary savings account.
- Emergency Fund
Unexpected expenses can come in many forms. If you need to borrow money for a new phone because your phone gave up on you, then you are in trouble. You will need to have at least three to six times your monthly income in your emergency fund. If possible, set aside $500 per month or save any amount that you can to start your emergency fund.
- Me Fund
Savings should not only be for the things that you need. You should also save for the things that you want and bring you joy. Do you love traveling? Then save for a yearly trip. Do you want that new model of your pre-owned car? Save for it. Do you like to watch concerts? Reward yourself now and then with live performances of your favorite artists. Saving to reward yourself can help you avoid getting loans or using your credit card.
Saving for your future requires patience and perseverance. Be committed to your savings goals, and once in a while, do not forget to indulge yourself. After all, life is meant to be enjoyed, too.