You are part of the work force and out on your own.
Establishing a solid financial foundation should be a priority, including insurance in the mix. It’s important to understand what affects the cost and availability of insurance. If you have accidents, insurance will increase in cost. Financial instability, getting smothered by credit card debt, is frequently a predictor of future insurance losses. As a result, an insurance company may see additional risk, making it more difficult to get coverage at the best possible price. Conversely, if we take care of ourselves and protect what we own, insurers will see good insurance risks and are more likely to compete for your business.
Your parents probably have life insurance which will be part of their estate. But now that you are on your own, you have to think about your own insurance needs. When you are young, your life expectancy is high, which means the cost of life insurance is low. Life insurance becomes increasingly important if you have others who depend on you, including aging parents.
Once you are out of school or older than 23, your parents’ health plan won’t cover you. As you sort through job prospects, it’s tempting to go for the opportunity that puts the most dollars in your pocket. Health coverage is perhaps the most important job-related benefit you can get. Many companies have coverage through a managed-care plan, which means that many decisions, including which physicians are included in the network, are made by the healthcare provider. Others have more flexible plans that allow their employees to choose their physicians. In both cases, the employee is responsible for some co-payments which help keep costs under control.
When we are young, we feel indestructible. In fact, at this stage, we are four times more likely to be disabled than die. Many employers offer an option of disability coverage, which provides for lost income if you are injured as a result of non-work activities and unable to work. Most large businesses offer disability coverage. Smaller businesses may not. If the injury is work-related, then workers compensation coverage applies.
The good news is we are living longer. The challenge is how we as a society will meet the expanded need for care for an aging population. In many cases, the immediate question is how to best care for aging parents. Increasingly, late in life, children serve as guardians for their parents. There are many options for custodial care, ranging from in-house care to nursing homes. As a general rule, for everyone in your family, the earlier you consider buying long-term care coverage, the cheaper it will be.
You may not be making a lot of money, but it’s probably more than you’ve had before. You have an apartment to furnish, a wardrobe to build and perhaps student loans to pay off. It’s also important to save money. Most financial experts emphasize that, even if you start small, becoming a saver or investor earlier in life and keeping it up during your peak earning years is very important. Put some money away regularly, even if it is only a small amount. Treat it as a bill and pay yourself along with your other obligations. This can be a rainy day fund or be for a specific purpose, such as a down payment on a home or car.
If your employer offers a 401(k) at work with matching funds, sign up for the maximum if you can. It’s “free money.”
At this point, it’s also important to know what not to do. We live in a “credit-card society” and are bombarded with advertising that suggests we can have it all right now – the clothes, the car and the fast lane. It sounds old-fashioned, but living within your means is important. Maintaining a good credit rating will help you get the best rate when you apply for a home or car loan. It can help you get a better job or apartment. It can even save you money on your insurance.