It seems like the 18 to 25 age group is often excluded when we talk about securing our financial futures. Everyone believes they have TIME to do certain things, such as getting a legal Will drawn up. Oftentimes, this age group simply has not been educated on the financial habits to have once they turn 18. I thought about my own kids at this age when writing this post. To be honest, I didn’t know they needed a Power of Attorney or a Will because I still viewed them as my children. The truth is, once they hit 18, you have no real say in anything related to them if they don’t take certain steps. When our son turned 19 we got on it! Here are 5 things those 18 to 25 need to do NOW!
1. Have A Will Legally Drafted
Many young people don’t see the need in getting a will. If something terrible happens, you will need to instruct your loved ones on what to do with whatever assets you have in the bank or whatever property you own. There are a few places where you can get an inexpensive Will template online (i.e. LegalZoom). However, it’s always good to talk to an attorney in your specific state. Legal counsel outside of your state cannot draft your will. Call around and see which attorneys offer free consultations or host free/inexpensive estate planning workshops. Having your will drafted with minimal assets should be around $150- $250. If you’re part of a legal benefits program at work, it will run cheaper than that – if not free.
Now, you may think because you are young and may not have much that you don’t need one. Not so, every adult needs a Will. In other cases, you may have substantial savings, inherited money or other wealth. You most definitely need to put a Will in place.
2. Get a Medical and Financial Power of Attorney
A Will’s primary purpose is to provide instruction on what should be done with your assets after you’ve passed away. The Medical and Financial Durable Power of Attorney allow the person you assign to make medical and financial decisions for you while you’re still alive. They come in handy if something happens to you and you can’t make those decisions for yourself. You can find a POA template online inexpensively or they cost around $150 – $250 to file with an attorney – this price covers both in one document.
3. Purchase Your Life Insurance
Is there someone or something in your life that you love? Do you want to take care of them even after you pass away? If so, life insurance allows you to do that in an affordable way. Life insurance plans at ages 18 to 25 run pretty low, with some as cheap as $30 per month. There are so many options for this type of insurance, and you should talk to a licensed insurance provider to guide you through those different choices, but a simple term life policy will do just fine. If your parents don’t already have a policy for you (until you turn 26), at minimum you can opt to get burial insurance. If they do, that’s great! You just have to check in to make sure there are no issues and the bill is paid each month or it will lapse. YES, young people need life insurance.
4. Start a 401K or IRA
If you are working, sign up for your company 401k or other employer retirement savings. They normally offer a ‘match’. What this means is for every $1 you put into your retirement savings, they will ‘match’ up to a certain percent. Often 50% – so for every $1.00 you put in, they’ll put in .50 cent They will often have a minimum that you have to put in before they start matching, like 6%. If you can afford to contribute that much, DO. If you can’t, start as low as 1% and increase over time. It’s just important that you take advantage of the free money EARLY. If your job doesn’t offer 401K as a benefit, open an IRA on your own.
Another tip – place someone you trust as the beneficiary on your bank and retirement accounts.
pssst… please not your boyfriend or girlfriend. If you aren’t married, a trusted sibling, parent, aunt or uncle. Relationships at this age may come and go. You don’t want to have to keep changing your documentation…. I’m just sayin’!
5. Learn How to Manage Money!
Start reading financial books and magazines. I love Black Enterprise and Money Magazine. If you shoot an email to hello@dorethiakelly.com, I’ll send you a free electronic copy of my #MoneyChat THE BOOK! In addition to how to save and get out of debt, there are two chapters on investing that can explain 401k’s, IRAs, compound interest and more.
As a young adult, are there any other financial tips you want to know about? Let us know!
Dorethia Kelly, MBA is an Award-winning Financial Expert, Personal Finance and Business Coach, Author, and CEO of #MoneyChat®. She is also the author of #MoneyChat THE BOOK. Dorethia empowers individuals to reach financial, entrepreneurial and career goals with coaching, and keynotes. Here online #MoneyChat Community, Membership and Masterclasses have empowered countless individuals and entrepreneurs to reach their goals.
Dorethia has been featured in various national media, including CNBC, Black Enterprise, U.S. News, USA Today and Experian. Connect with @DorethiaKelly online. Visit dorethiakelly.com & moneychatbook.com
#MoneyChat THE BOOK – How to Get Out of Debt, Manage Your Money and Create Financial Security – is available now! Get your copy on Amazon or anywhere you buy books today!
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