Milestones refer to the transitions we have to go through that has the most effect in our daily living conditions. In most cases, the changes are really very significant and marks an important passage in our life. However, most of the time, we emerge from each experience differently because we have different goals in life. Not only that, we sometimes prepare for it differently.
The future is very much unpredictable but you should know that proper preparation will ensure that we can get the best out of every milestone that we go through. Just like the decisions you made in the past have shaped your living conditions today, the same is true for your future. So if you want to make sure that your future will be great, you have to make the right choices today.
One of the factors that will determine how prepared we are is our personal finances. It will tell you if the transitions will go smoothly and if you will live a better life after that change. For instance, your debt can affect your future in a significant way if you are not careful. This is why you need to make sure that your personal finances are ready for the milestones that you will encounter.
Milestones that weigh heavily on your financial stability
So what are the milestones that you will encounter that rely heavily on your financial stability? Let us go through them based on the order that you will encounter them.
Education
This may seem surprising but yes, your education is a milestone – at least, graduating is the specific point. A lot of people are burdened with student loans and this is probably the most important consideration for this period in your life. It is really up to your parents to prepare for this but there are also some ways that you can keep any student debt that you need to take from spiraling out of control.
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Keep your spending low. If you have to put yourself through a student loan, make sure you do not need to add to that by making smart choices about where you will spend it.
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Do not incur credit card debt. The reason why new graduates are having a tough time is because they have both student and credit card debt.
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Get a part time job and save up for your future. There is no such thing as being too early to save so you need to start teaching yourself to do it even while in school. You can get a part time job to finance your entertainment expenses if you want to have fun in college – but pay for everything in cash and not credit.
Buying a home/car
Whether you buy it with your special someone or you buy it on your own, this is an important milestone in your life. This signifies a more responsible you financially – at least, that should be your target. You need to be careful about the loan amount you will borrow and make sure you have a payment plan in place to pay it off. Here are some tips:
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If you can save up for a car, do so. The value of cars depreciate so buying it in cash makes much more sense.
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Save up for the down payment of your home. This will help lower the mortgage that you have to borrow. That will also mean lower interest rates, lower monthly payments and a shorter term on your loan.
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Prepare your credit report. A bad credit report will prompt lenders to mark you as a high risk borrower – thus leading to a higher interest rate on your loan.
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Buy only what you need, not based on what you can afford. In most cases, the lender will tell you the highest amount that you can loan. Even if you can afford a million dollar home, buy only a $500,000 home if that is all you need.
Marriage
This is a major milestone in your life that also relies on your financial stability to make sure you have a comfortable life with your new spouse. While you can expect that this will be mainly dependent on your emotions, you still have to take a peek into both of your finances.
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Determine both of your financial conditions. A lot of couples end up divorcing because they discovered hidden debts or spending problems that ruined their personal finances. Just be honest from the start with your spouse.
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Talk about your spending habits. This is important so you can decide who gets to pay for what expense.
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Set common financial goals. One way to unite yourselves further is to make common financial goals for the future. It helps put you on the same page when it comes to handling your household finances.
Parenthood
Being a parent entails a lot of considerations in your life. Unlike your spouse, your child will be solely dependent on you for a lot of things – especially your finances. You need to prepare for the following expenses:
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Childbearing and childbirth. This is probably the first few expenses that you will spend for so ensure that you have enough funds for it.
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Medical and health care for your child. Young ones require a special health and medical care while they are growing up so make sure you can supply for these needs.
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Clothes, toys, other needs. You have a new set of mouth to feed so expect that it will bloat your household budget.
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Education. Probably the most expensive expense you will make is on your child’s education. Help prep them up for a secure future by investing in their education.
Retirement
Retiring is an important milestone that you have to prepare for because your savings will help spend for your everyday needs. Do not be like the other retirees who expect to continue working until they can. Give yourself a proper retirement.
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Start saving while you are young. Any amount can grow if you are consistently adding to it.
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Know the benefits you are entitled to. Benefits.gov is a government website that you can use to see what benefits you can expect when you retire. This is also a great site to find benefits for students, single parents, minorities and children.
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Determine the type of life that you want to live in retirement. Once you know how you want to retire, you will know how much you need to raise.
Money management today = Financial stability tomorrow
Without a doubt, proper money management today will result in financial stability of your future. Financial management encompasses a lot of concepts but there are three important things that will help you reach stability.
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Budgeting. When you budget, you are maximizing your limited resources and making sure that the important expenses are funded. That means your priorities like debts payments, bills and savings will always be allotted money.
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Smart spending. This is really not about depriving yourself of anything but more of putting your money where it can be exchanged to get the best value. You make sure that you spend only on the important expenses in your life.
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Saving. The best preventive measure that you have to counter any negative effect on your life milestones is savings. You should understand how it is important in giving you the resources that you need to help with the transition and the changes that will take effect in your life.
Practicing proper financial management is the best way for you to keep your future secure. You don’t have to worry about the management part per se because there are several tools that you can use to help you monitor your money. There are even personal money management applications for your smartphone so you can view your money anytime and anywhere.
