Do you wonder if you're doing the right things with your finances? Perhaps you don't know where to focus your attention. As we move through adulthood, we pass through several financial life stages and make budget, debt and investing choices. Understanding where you are and which financial management activities commonly occur at your life stage can help you meet your goals.
Young adults attending college often need time to adjust to being in charge of their own finances. Between applying for student loans and college credit cards, and struggling with budgeting on a student income, college students may find it difficult to balance cash flow. Establish good credit habits, such as paying credit card bills on time, staying out of overdraft on bank accounts, and keeping your credit balances below their limits. It can take years to improve a negative credit history, so start strong and do your best to keep your credit healthy!
Graduating from college and entering the workforce brings new financial management challenges, such as making regular student loan payments. You may want to apply for a car loan or increase your credit card limit. Now is also the time to start a savings program. As you get promotions or raises, start contributing to short- and long-term savings, especially an emergency fund. Continue to make all payments on time and review your credit file annually to verify the information is correct. In the near future, you may need a mortgage loan, and good credit could help qualify you for a lower interest rate.
Marriage, children, and home ownership make this a busy life stage. Budgeting for household bills, loan payments, emergency savings, education savings, and retirement planning often requires careful financial management. Take time now to fine-tune financial plans. Inquire about life insurance to protect your family members from financial pressure should anything happen to you. As you apply for joint credit products, remember that you and your partner are equally responsible for repaying jointly borrowed money. Negative credit will affect both of your credit files.
If you have managed your credit responsibly to this point, your credit file and score may work in your favor. Continue to check your credit annually. A good credit score may help you get reduced interest rates on a mortgage refinance or limit increases. While your equity and savings grow, your debt and outstanding credit balances are declining.
For many people, an ideal retirement includes spending time with loved ones, pursuing travel and other leisure activities. Even if your borrowing activity slows in retirement, continue to check your credit report annually. Identifying any out-of-the-ordinary activity, such as inquiries from unknown companies or people, can alert you to potential issues such as attempted identity theft.