There are lots of adulting responsibilities that we’d rather not deal with and one of the biggest is handling our personal finances. But as we get older, we need to be prepared and understand what’s going on with our money and knowing these things about our finances while we’re in our 30s can help.
- Your current net worth - This means knowing both your assets and liabilities, which is what you own and what you owe. Don’t let your debt or your savings account balance be a mystery to you.
- The importance of investing - By the time you’re in your mid-thirties, if you haven’t already started, it’s time to invest in your 401k, Roth, traditional IRA or something else for your future. Even if it’s just $100 a month, the sooner you get started the better shape you’ll be in later on.
- How much you need for retirement - You need to know how much you need so you know if you’re on track with your savings. There are online retirement calculators that can help you figure it out and meeting with a financial planner can too.
- What your credit score is - It’s basically a number assigned to you by lenders to show how risky it is to lend to you and your credit score can affect your financial health, buying options and your chances of getting everything from a small loan to a mortgage.
- How to budget - Being able to create and stick to a realistic budget makes financial planning so much easier. As your life situation changes, your budget can too and mastering it now will make it easier when you’re saving for bigger goals later on.
- What an emergency fund is - Research shows that more than half (57%) of Americans have less than $1,000 in savings, so they’re totally unprepared for unexpected events. That’s why you need an emergency fund - a cushion of money equal to about three to six months of living expenses.
- How compound interest works - It’s basically free money and here’s how it works, according to financial planner Lauren Zangardi Haynes. “As your invested assets earn dividends and interest and you reinvest those dividends and interest payments, then your earnings will start to make money for you,” she explains. Thanks to compound interest, you may be “better off starting earlier and saving a smaller amount of money on a regular basis versus starting later and saving more money.”
Source: She Knows