How to Plan for Costs for Every Age

plan for costs at every age

Going through life with sound financial backing is becoming more of a challenge for most people. After the 2008 economic crash, a lot of us realized that we were not taking note of our finances and plan for costs as we should. As a result, many Americans decided that things needed to change from a personal standpoint if we were going to have any semblance of a good retirement after decades of hard working. In this post, we’ll take a look at some of the vital financial decisions you’ll need to make during key stages of your life.

Paying off Debt

The average American student loan debt stands at $29,400, give or take a few hundred dollars. This, coupled with credit card debt can make you start life on the wrong footing.  Debt can hold you back both psychologically and financially, so it’s important to cut it down as soon as possible. Start by allocating a certain amount of your monthly income to debt payment. In addition, consider opening up various accounts where you can stash money that will go into paying the different types of debt you have. If you feel overwhelmed and don’t think you can do it on your own, look into debt consolidation agencies as well as debt counseling. Once you get out of debt, make sure to adopt good financial hygiene such as saving more than 10 percent of your income and choosing cards with a lower APR and cash back rewards to help you stay out of debt.

Buying a Home

If you’ve always wanted to own a home because of the example you were shown by your parents (they most likely took out a mortgage that they paid off for more than two decades of their life), think twice. This is because it has been shown that owning a home may not be a sound financial decision since market forces can hit you when you least expect it, effectively erasing all your financial gains. Opt to rent or lease to minimize your risk.

Starting a Family

Children are a boon to any couple given their contribution to the quality of life that they provide. That being said, having children may set you back financially in the long run. On average, it costs families anywhere from $13,000 to $15,000 to raise a child annually. College costs are also rising and are expected to hit the $300,000 mark by 2033. This is a huge investment that should be carefully considered by parents who are considering having themselves a comfortable retirement.

Healthcare

As we age, our bodies start showing signs of wear and tear. This could be in the form of illnesses that may need short or long-term care. If you would like to live a quality life without having to contend with the cost of treatment, you may want to put money into a savings account earlier in life. Insurance is great, but it hardly covers most conditions that are common in old age.

These tips, along with living within your means and investing and saving can go a long way in ensuring that you have enough money to go through life effortlessly.