Most of the articles I write are meant for retiring feds. The years approaching retirement are full of decisions that make huge differences for decades to come. As we all know, planning for the future is like bending down to pick something up: the younger you are, the easier it is.
For all those young federal employees out there, here are some tips that will make your life much easier now and down the road.
Know What You Spend
You may have rolled your eyes when you read this one, but there is a reason that I put it down as tip #1. Knowing where your money goes is the core of personal finance.
We all can easily rattle off the amount that we make but few of us are certain of where it all goes. Once you know where your money is going, you are then able to make adjustments and plan for the future. Without knowing your expenses, it is just a guessing game.
Now, I am not saying that you have to get a fancy budgeting software. I really don’t care how people track their money. All that matters is that you do.
There are many factors that affect our finances. Things like taxes and inflation come into play all the time. But if I had to pick the most powerful factor in being financially prepared for the future and retirement, it would be time.
If you have time, you are able to overcome just about anything, and when it comes to investing, time is everything.
Time allows compound interest to do its job and the more time you have, the more it works for you (and the less you have to work).
Invest as much as you can as early as you can. Max out your TSP if you can and save in other accounts if you have anything left. The money that you invest at the beginning of your career produces multiples of what it would produce if you wait. Start today!
Young people often have young families and higher debts. Children and spouses often rely on the breadwinner to keep winning the bread. Life insurance is often a key part of being financially prepared in these situations.
Not everyone needs life insurance. Someone that is single with no kids and no major debts may not need any at all, but if your family would be in a tight spot without you, please consider life insurance.
Most life insurance needs don’t last forever, so often a term policy is the best option. FEGLI can be a great solution, just make sure to watch the rising premiums as you get older.
Say No To Debt
Many young people have mortgages, auto loans, and credit card debt. While all debt isn’t bad (i.e. a mortgage on a house that you can afford), you will want to limit other types of debt as much as possible. Doing so will help you live within your means as well as to not pay an arm and a leg in interest over the years.
Your Life Plan
I often tell my clients that a great retirement doesn’t happen by accident. It comes after a well earned career and thousands of well thought out financial decisions. All of those great decisions compound to give you the options to have the retirement that you truly want.
The same is true for life. Nothing great happens by accident.
What are your goals? Are they to travel the world, be a great dad, be financially free, or all of the above?
Whatever they may be, don’t wait. Life is too short to wait. Obviously, we want to make smart long-term decisions, but happiness should never be postponed. Start today!