Last month we examined financial planning issues for people in their twenties. This month we will continue with a look at several issues facing families and professionals in their thirties.
As college graduates begin careers and enter the real world, cash flow is often very tight for several years. Buying and furnishing a home, getting married and having kids, and the other myriad expenses associated with “starting out” can be overwhelming. Even when being very conscientious in making purchases, unanticipated expenses such as health crises or needing a new vehicle, put together with college loans can add to a struggling cash flow.
Moving from one’s twenties into the thirties is not only marks a progression of time, but also a subtle shift in the growth of a young person’s financial journey. I often see clients make substantial gains in their income throughout their thirties. Some of this is happens because of work experience, some comes from looking for better and higher paying positions. Having a plan to use these growing earnings in an intentional manner will be greatly beneficial in the years ahead.
If you have credit card debt, work on eliminating it as quickly as possible. High interest, revolving debt is the worst type of debt. If you still have college loans, put together a strategy for paying off the debt. Work out an amortization schedule and pay them down faster than the minimum payments if possible.
Contribute regularly to a separate account to build up your emergency fund. I have many clients who set up an account that we call a “Cash Management Account”. It’s simply a brokerage account designed to receive monthly contributions that we keep in cash. After a few years we may invest a portion, but the key is that although the money is very accessible, it takes another step or two to get to than just going to the bank or ATM, and therefore the money tends to stay there.
Evaluate your insurance coverage. This is a broad topic, because over the ten or fifteen years since college (or law school, or med school), many things have changed. More than likely, you have a family, your income has grown, you have a house, cars, possibly a boat, and the list goes on. Often, I meet with people who get life insurance when they are married and never review it. Once children come along and income goes up, it’s imperative to assure needs are met. The same goes for disability coverage as income goes up, especially for certain professionals. Don’t forget to meet with your property and casualty agent on a regular basis to review coverage as well.
As your family grows, don’t forget the importance of estate planning. If you and your spouse weren’t here, who would you want to be the guardian (and successor guardian) of your children? The same goes for trustee of funds for them, and how the funds are paid out. Also, don’t forget the importance of living wills and powers of attorney.
As the title suggests, these are serious subjects, and “adult” responsibilities. Although on first glance, some of them may seem complex, they really are not. They just require planning and the discipline to stick with a plan of regular reviews. If I can help or if you would like additional information, please feel free to contact me.
Monte Miller (865) 776-5577 firstname.lastname@example.org