Whether or not your parents were great with their money or did all the right things financially, should not play a major role in how you manage your finances. You probably look to your parents for guidance in a lot of areas, but sometimes their financial advice is not always the best advice for you and your family.
According to a survey from the Insured Retirement Institute, in 2018 only 24 percent of baby boomers (ages 51-69) were confident they had enough savings to last through retirement. Even more shocking was the fact that only 39 percent of baby boomers even bothered to figure out their retirement needs.
That is scary. Several factors make taking your parents advice as 100% solid financial gospel, including the current economy, family size, travel and personal preference or opinion. Here are a few tips from pros and parents who have been where you are and are accomplishing things you’d like to accomplish.
Feel free to take their “parentally advice” or add their words to your Mom & Dad’s sage words of wisdom.
Focus on investing as if your retirement depends on it.
And let’s just be honest – it really does depend on it. If you have not invested in your retirement before, a good place to start is your work-sponsored retirement plan, if you have one. These 401k plans are a great place to add money to your retirement fund, pre-tax if you choose, and often you can even get a company match. That is like getting free money! You can add most times up to 6% of your income and your company will give you 6% in that account FREE. You also have the option to open other accounts such as a traditional or Roth IRAs if you don’t work somewhere with a retirement plan in place or work for yourself.
There are ways to invest in a 401K and even in real estate investments to add money to your retirement. Investment opportunities are everywhere – start investing in YOUR own future.
Do your research before you choose a financial advisor.
Remember nothing of real value usually comes for free. Financial advisors cost money, so you want to find one that is going to do the best work possible for your specific needs. With Internet reviews and referrals available you can easily find advisors, research their track record, get reviews and even ask them questions before committing to their services. The first place to start is to ask friends and relatives who they use and then ask them why they like or use them. Their answer should tell you if you will trust them as well.
Research your borrowing options to find the best fit for your purchase and situation.
Obviously, there are many borrowing options out there for you and the item you want to purchase. There is a mortgage to help you buy a house, student loans to help you go to school, and credit cards to help you build credit and even earn some rewards. Make sure you research all the borrowing options that are available to you and will best fit your life and financial needs before signing on the dotted line. Some companies can have hidden fees or shady practices, so take your time and research not just who to use but if you should even be borrowing the money in the first place. Sometimes cash is king and delaying the purchase is better than taking out a loan.
Lookout for employment opportunities offering greater financial and professional growth opportunities.
Nowadays (versus our parent’s generation), people rarely stick with the same employer for their entire careers. People are taking more risks and responsibilities that could better their circumstances. That means that people are exploring better employment options. Exploring another employer or career could increase your income, gain better benefits, like healthcare or 401k, or find a new company culture that works better for you. Sites like LinkedIn can help you keep your information and resume current and in the sights of top companies looking for what you have to offer.
Take care of your credit score.
Credit scores were not a big a thing when our parents were growing up. Now you can get a free credit score online and even find out where you need to improve to get that mortgage or if you have an outstanding debt that was never paid. You need a good credit score to get many types of credit or loans, unless you want to pay high interest rates. In order to build good credit, you should pay your bills on time and do not borrow more than you can afford to pay back.
Prepare for the worst-case scenario.
You never know when your furnace will go in the middle of winter or when your car will suddenly die, and you must get it fixed. Keeping a full-stocked emergency fund is a great way to ensure that if one of your kids has a medical emergency you can get them treated without worrying about the huge amount of money you are going to have to pay out. Always make sure you have enough money put away for something that could happen that you do not usually expect.
Whether or not your parents were good with money means nothing. This is about you and how you treat your finances. Be that role model for your kids. Be that financial legacy. There are so many resources available to you now that your parents never had available to them. Use them wisely and you can reach all your financial goals.