Chapter 4. Plan for the Future

You are making progress. You've created a budget and emergency fund, and considered debts. Now lets move on to step four, Planning for the Future.

It's never too early to begin planning for the future and begin saving for major expenses that are going to come up. Often, your financial future can seem unknown and distant, but taking the time to save and protect your money now will pay off tomorrow. This step in your financial ladder is when you look at  Retirement and Insurance. You're goal is to save early and save often.

Retirement can be hard to think about when you are just getting started in your career. It might be hard to justify saving money that could be going to current expenses or goals. However, ask yourself: Do I want to be able to stop working one day? For many, the idea of not working into our old age is appealing, but saving for retirement means investing, and, like any investment, timing matters. It is important to begin saving money now so you can benefit from compounding interest and see your savings grow faster.

Often, those with full-time employment have access to an employer-sponsored retirement plan such as a 401K or 403B. These plans make saving for retirement simple as they generally will invest funds directly from your gross paycheck. If you are a student or do not have access to an employer-sponsored plan, there are other retirement planning options. If you are working part-time as a college student or have an income, you could open up a retirement account for yourself to save for the future right now. It's called an IRA, an individual retirement account. IRAs are accessible and not super complicated to open. Consider using a broker or bank you trust to open an account and remember to do your research on what type of account you would like to have.

 

Planning for your future should also include protecting yourself, like making a plan to protect yourself from financial loss. You can take care of yourself and protect yourself with different types of Insurance coverage to avoid having to pay really big bills that could come up for you should something happen. The type and amount of insurance coverage that you choose will be based on your level of risk tolerance. It's also important to keep yourself and your information safe from fraud and identity theft, each of which could lead to financial loss. In these cases, criminals use your personal information (like your Social Security number and address) to open up credit cards and take out loans in your name. 

 

Practice

Now that you know how to plan for your future, consider paying it forward and discuss your plans with a friend of a family member.

Want to learn more about Identity Theft? Click here for the Identity Theft module in our MoneyCounts Series.

Want to learn more about Life After Graduation? Click here for the Life After Graduation module in our MoneyCounts Series.

Want to learn more about Retirement Planning? Click here for the Retirement Planning module in our MoneyCounts Series.

Want to learn more about Insurance Planning? Click here for the Insurance Planning module in our MoneyCounts Series.

 

Congratulations! You can move on to Chapter 5. Grow your Wealth

To review the full module on Financial Literacy Overview (FLO), click here.