When it comes to the “adulting” to-do list, you’ve probably checked off some pretty important boxes. Get a job? Check. Pay your bills? Check. Sign a lease or buy a house? Check. Even if you’ve got this whole adulting thing mostly down, there still may be a few unchecked financial planning boxes that are holding you back from reaching your full potential.
Not sure if there are any areas where you could stand to grow up? Here are five clear signs that you need to work on your financial adulting.
1. You Live Paycheck to Paycheck
Warning Sign: Even if you are making good money, you are living paycheck to paycheck without a savings account or backup plan. A backup plan that includes the term “mom and dad,” incidentally, does not count.
Adulting Solution: Set incremental savings goals, and start putting money away. Your first goal should be to save $1,000 within three months. Once you have that socked away, aim for $5,000 within a year, and eventually $10,000 within two years. Rome wasn’t built in a day, and neither is an emergency fund.
2. You’re Waiting to “Feel Like an Adult”
Warning Sign: You constantly say things to yourself like, “I’ll buy a house when I’m making more money,” “I’ll start contributing to a retirement fund when all of my debt is paid off,” or “I’ll grow my savings account when I get that raise or tax refund.”
Adulting Solution: Build your financial muscle memory by putting money toward your long-term financial goals now. Even if this means you can only put $20 each week in a savings account toward a house to start, this will help you build the habit and increase the chances that you’ll actually put that tax refund toward a house, too. Once you do get a raise, increasing the amount that you’re already putting toward a goal is a mentally easier hurdle to jump than starting from scratch.
3. Insurance Benefits Confuse You
Warning Sign: When it comes to open enrollment, you are completely lost. You don’t understand the difference between what your employer’s disability insurance covers and what long-term plans you can purchase, and don’t have the slightest idea what life insurance policy is for you. Instead of figuring it out, you pass on your coverage options.
Adulting Solution: Educate yourself! A good place to start is to sit down with someone in your HR department for more information or clarification. If that person seems unsure about the options, a financial advisor can help you sort out what you should take advantage of, and what to avoid so that you aren't taken advantage of.
4. Your Friends Have More Spending Money
Warning Sign: You have constant envy every time you scroll through your friends’ Instagram accounts that document fabulous vacations. When you compare what they make to your own income, you are left scratching your head as to how they are taking these holidays.
Adulting Solution: I'll let you in on a little secret: Your friends have filled their emergency funds, automated their retirement contributions, and have a separate travel savings account. At the very least, they have mastered the art of budgeting. Make a reasonable budget that allows you to save for vacations or other indulgences. Calculate your cash flow by subtracting your set expenses from your income, and prioritize how you will save and spend the rest.
5. Your Peers Have Financial Planners
Warning Sign: Maybe it has come up at dinner with friends, or in the break room with coworkers that your peers are working with financial planners. You are either hit with a sudden panic that you're "behind" or you justify not hiring a financial advisor because you are not wealthy.
Adulting Solution: Waiting until you are wealthy to hire a financial planner is like waiting until you have lost weight to start exercising. A financial planner will help you work with the funds you have to plan for your long-term financial future. Ask your peers for introductions to their planners, or hop on the Certified Financial Planner Board website to find one tailored to your needs.
Advisory services offered through Investment Advisors, a division of ProEquities Inc., A Registered Investment Advisor. Securities offered through ProEquities, Inc., a Registered Broker-Dealer, Member FINRA & SIPC. Stable Waters Financial is independent of ProEquities, Inc.
Katie Waters is a member of the DailyWorth Connect Program. Read more about the program here.