Financial Health Check-Up

This article based on information from the Kasasa Blog, January 2021.

Just as your doctor provides age-appropriate health checks and tips, your financial health should be reviewed regularly. Some financial check-ups happen at every age, such as checking your credit and monitoring your accounts. But for the less frequent financial moves, these tips can keep you on track at any age.

Young Children

  • Start putting aside money for your child’s college early, but only if you are already on track with your retirement and paying off your debt.
  • Open a kid’s savings account and help them keep track of deposits. Encourage them to save at least 10% of any money they receive and show them how it grows over time.

Teens & Recent Graduates

  • Start thinking about your future. Open a free checking account so you can track spending and set aside money for things you want to buy. Ask a parent or guardian to help you if you are under age 18. Set up shared access for online banking to make it easy for your parents to help you manage your account.
  • Begin researching financial aid options in high school. College is expensive and student loan debt can be a burden later in life. Explore financial aid options as closely as your college options.
  • Open a credit card to start building credit history. When used responsibly, credit cards can help you build credit while avoiding problems with debt. Open a single card with a low credit limit and no annual fee. Choose a set expense—like your phone bill or gas for your car—to put on the card. Pay it off on time and in full each month to start building good credit. Set up automatic payments or calendar reminders to help make sure your payments are on time.

In Your 20s, 30s & 40s

  • Begin using a budget. Getting a handle on finances will set you up for a lifetime of financial fitness.
  • Shop around for a checking account. You may have outgrown your existing account. There are great rewards options available when you begin using more account features.
  • Start saving money. Even if you do not have a specific savings goal, you should save for the unexpected. See whether a savings account, money market, or certificate of deposit (CD) is the best option for your needs.
  • Build your credit score and prioritize getting out of debt. Use credit wisely. Keep up with your mortgage, loan, and credit card payments. Pay down debts with a high interest rate if you can afford to.
  • Save for retirement. Contribute enough to your employer’s retirement plan to receive any matched funds. Research other retirement accounts, like IRAs, for savings outside of work. Increase your contributions on a regular basis.
  • Buy life insurance. Life insurance provides for your loved ones and can give you peace of mind. Rates increase in your 50s, so getting a fixed rate at a younger age may make sense, depending on your situation.

In Your 50s & 60s

  • Continue to prioritize your debt and avoid taking on any major new debt. Paying off your debt now will make it less of a burden in retirement. Paying more toward your mortgage builds equity, giving you more money if you choose to sell your home.
  • Review your Social Security earnings. Set up an online account with the Social Security Administration to review your current earnings and projected benefits.
  • Start planning for long-term expenses. Save for healthcare and look into long-term care insurance.

Pre-Retirement & Retirement

  • Consider waiting to collect Social Security benefits. If you wait until your full retirement age to draw benefits, you will get the maximum amount you are entitled to.
  • Review your Medicare options. Medicare can reduce some of the financial burden of healthcare costs. If you already have considerable savings, you may be able to go with a more basic coverage. If not, find a plan with lower out-of-pocket costs.
  • Keep an eye on your household budget and investments. Make sure your spending is appropriate for the size of your savings. Review your investments regularly to ensure they keep growing and will provide you with income for as long as you need.
  • Work with an estate planner to ensure your finances and legacy are protected.

Good financial habits last a lifetime. The sooner you start, the more prepared you will be for later years. Good habits like paying down debt and investing for your future have real payoffs for your financial health.

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