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Money Management Tips for Young Adults

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Money Management Tips for Young Adults

Young adults today face a variety of challenges in their quest for financial security. Some of these obstacles are similar to those faced by previous generations, while others are unique to the times. If you are a young adult, here are five financial tips to help you manage your money and prepare for your future.

1) Invest in your future. Ongoing technological changes in various fields may require continuing education. You may wish to make ongoing career education a priority to enhance your skills and increase your professional potential. The more varied and flexible your skills, the more attractive you may be to prospective employers.

2) Open an emergency savings account. The uncertainty of the workplace may mean that your professional life will be interrupted by career changes. If you need to return to school full-time to change career paths, you may face periods of time without stable income. Creating an emergency fund to cover several months’ worth of living expenses can help you manage work-related transitions. This savings fund can also be used for opportunities, such as starting your own business.

3) Save early and continuously for retirement. Saving for your retirement is your responsibility—so apply discipline and diligence to this ongoing objective. You cannot necessarily depend on the government to provide future Social Security benefits. With employer-sponsored 401(k) plans, the responsibility of saving rests on your shoulders. Although you may be years away from retirement, the key is to make time and compound interest your allies.

4) Let retirement funds accumulate. If you change jobs early or often in your working years, consider rolling over your account into an Individual Retirement Account (IRA) or new company retirement plan. It may be tempting to cash in the account, especially if you have accumulated only a small amount, but doing so would make it immediately taxable and you may also incur an early withdrawal penalty. Perhaps a greater concern, however, is that you may be unable to make up for time already spent to accrue these savings.

5) Use credit wisely. Credit card companies frequently target young adults with the lure of “easy money.” While credit cards offer convenience (it’s virtually impossible to conduct some transactions, such as reserving airline tickets, without one), they also have the potential to create debt problems. Because payments can be stretched far into the future, overspending on credit can create an illusion of wealth. Paying off the full balance each month is the best way to control your use of credit.

Plan Now for the Future

Remember, the funds you accumulate during your working years may be your primary source of retirement income. Although inflation may threaten your nest egg, a little discipline and common sense over time may help you better manage your current and future financial affairs.

Pursuant to IRS Circular 230, MetLife is providing you with the following notification: The information contained in this brochure is not intended to ( and cannot) be used by anyone to avoid IRS penalties.You should seek advice based on your particular circumstances from an independent tax advisor.

MetLife and its representatives do not provide tax or legal advice. Please consult your tax advisor or attorney for such guidance.

Copyright © 2010 Liberty Publishing, Inc. All Rights Reserved.

L0910131096(exp1211)(All States)(DC)

This article appears courtesy of Karl Susman. Karl Susman is a representative of the New Engl and Life Insurance Company. He focuses on meeting the individual insurance and financial services needs of people on the West Coast. You can reach Karl at the office at (424) 785-4337. New Engl and Life Insurance Company, 501 Boylston Street, Boston, MA 02116

Consider Inflation When Assessing Your Insurance Coverage

When Brenda and Jake purchased their life insurance policies 20 years ago, they thought they did things the right way. They assessed their insurance needs, taking into account their home mortgage, the projected college education costs of their children, and their living expenses. Well, that was then. . .this is now.

Recently, as they contemplated retirement, Brenda and Jake reevaluated their insurance needs and were surprised to discover their insurance coverage is inadequate. How could this be? The answer, in a word, is inflation.

Because inflation affects purchasing power, it may also affect life insurance needs. For couples like Brenda and Jake, inflation means that life insurance coverage that was adequate years ago may now be insufficient. With this in mind, consider three of the more common uses for life insurance proceeds that may be affected by inflation:

Paying Off Your Mortgage. If you have recently purchased a new home or upgraded a home you already own, you may need to consider increasing your life insurance to help cover your mortgage payments. Insurance proceeds may be used to help pay off the mortgage in the event of the insured’s death.

Funding Future College Expenses. Compared to the previous year, the average annual cost of tuition, fees, room, and board for the 2008–09 academic year increased by over 5.5% at both private and public four-year colleges (The College Board, 2009). To be prepared, be sure to factor inflation into your college savings strategies. In addition, have a contingency plan in the form of adequate life insurance to help cover college expenses in the event of an untimely death. Review your strategy periodically, and consider increasing your coverage to reflect the anticipated future cost of higher education.

Maintaining Your St andard of Living. Over time, the costs associated with the normal expenses of everyday life, as well as the special pleasures most people look forward to in retirement—traveling, visiting children and gr andchildren, and engaging in favorite hobbies and leisure time activities—are affected by inflation. As a result, the lifestyle you hope to enjoy in retirement could be affected, too. Your life insurance coverage, based on yesterday’s needs and the current cost of goods and services, may be potentially shortchanging the future st andard of living of your loved ones. Factoring inflation into your life insurance program can help your loved ones maintain their lifestyle upon your death. In addition, if the policy allows, you can make withdrawals to fund your retirement years. However, any loans and withdrawals will decrease the amount of life insurance proceeds, and interest will be charged if the loan is not paid back before the insured dies.

Future Projections

Determining current life insurance needs is one thing, but figuring out how much coverage you’ll need in the future requires you to pay careful attention to inflation and how it can affect your family’s lifestyle. Regular reviews of your insurance coverage can make a great deal of sense. Plan to set aside time at least once each year to help ensure that your life insurance program is keeping up with inflation.

Copyright © 2010 Liberty Publishing, Inc. All Rights Reserved.

L0910132069(exp1011)(All States)(DC)

This article appears courtesy of Karl Susman. Karl Susman is a representative of the New Engl and Life Insurance Company. He focuses on meeting the individual insurance and financial services needs of people on the West Coast. You can reach Karl at the office at (424) 785-4337. New Engl and Life Insurance Company, 501 Boylston Street, Boston, MA 02116

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