Starting out on your own can be exciting. The future offers a wealth of possibilities and opportunities. At the same time, there are financial hazards that your parents and teachers may not have warned you about. Your financial future depends on your ability to recognize the financial challenges and the advantages of proper financial planning.
Selecting the Right Life Insurance Policy
The topic of life insurance can feel overwhelming. You don’t want to think too far ahead in the future since you’re just starting out, but you know that leaving your family in good hands financially is important. A life insurance policy will help your family pay off your medical bills and other debts after your passing, in addition to providing monetary benefits for lost income.
There are many life insurance providers out there who will give you different rates. Don’t settle on an insurance policy until you’ve done your research and determined the best coverage for your situation and budget. If you’ve started a family or are thinking about having a family, now is a good time to consider life insurance.
Dodging Credit Woes
Credit can be an asset or a curse. Marketers entice you to buy things that you can’t afford by offering you the ability to pay on an incremental basis. One such method is the “easy payment” plan, also known as a low minimum payment plan. It may be easy, but it is not cheap. If you only pay the minimum monthly payment, you may wind up paying three to four times more for the product. This happens because your minimum payment reduces a small portion for the balance. For instance, if you make a $100 minimum payment on a $6,000 loan at 18 percent, only $10 of that money will go toward paying off the balance. $90 goes to interest.
With guaranteed personal loans, lenders offer quick, automatic approval with no credit check. Typically, you’ll be charged a 400 percent APR or more, and you’ll have to repay the debt quickly. Beware of these types of loan offers, especially if they come through the mail or unsolicited emails.
There are several ways to successfully protect your credit rating. First off, keep your credit card applications to a minimum. Frequently applying for credit will pull down your credit score. Similarly, your rating can drop because of too much outstanding debt. Therefore, you should resist co-signing for someone else. It is also a good idea to check your credit score with one of the online credit-monitoring services.
Buying a House
Successfully protecting your credit and developing sound financial practices can help you achieve homeownership. In order to better afford a house purchase, try to narrow your search to cities that generally have lower-priced homes for sale.
Owning your own home can be a great investment. However, it requires a healthy down payment. You will need at least 5 percent for a conventional loan and 3.5 percent for a U.S. Federal Housing Administration (FHA) loan.
You won’t find a one-size-fits-all method when it comes to saving for your down payment. There are actually many ways to afford it, such as sticking to a strict budget, finding a side job and making necessary changes to your savings plan. Being rent-burdened can hinder your saving efforts by putting the squeeze on your budget. If you find that you are rent-burdened, consider adding roommates. Also, attempt to find an apartment managing opportunity where you can trade managing duties for rent payments.
Remember, a goal without a plan is just a wish. A tight budget and a keen eye for financial predators will go a long way toward helping you secure a promising future. If homeownership is in your plans, you hold the controls that determine how your credit report will be read and how you will save for the down payment.
Photo Credit: Pexel.com