Are You Financially "Adulting"?
The Urban Dictionary defines "adulting" as (in part) "to do grown up things and hold responsibilities." True financial adulting goes beyond paying your bills on time. It's also about planning for the future, managing debt, and mitigating risk.
How are you doing at financially adulting? Use this quiz to find out. Determine which statement best describes your financial adulting behavior. Add the points for each question to determine whether you're a pro or if you have some changes to make to get yourself together.
The Ultimate Financial Adulting Quiz
1. I describe my budgeting behavior as:
2. I handle debt in the following way:
3. I plan for my financial future by these actions:
4. I plan for risk in my life this way:
5. I manage important paperwork in the following way:
How did you do?
How to win at financial adulting
Anyone can win at financial adulting, but it takes planning and discipline.
First, create a budget and keep track of your spending. You can track it digitally or in a written log, but it's important to know where your money is going. Review your spending against your budget and make adjustments to your budget as needed.
Be aware of how much debt you incur. If you're constantly unable to pay off credit cards in full, you are living beyond your means, and you need to earn more or curb your spending. Having too much debt can affect every aspect of your life, from your credit score to your relationships to your employment.
It's important to have an emergency fund to handle unexpected expenses. If you don't have $500 in savings, set a goal to save that much immediately. Then try to save at least enough to cover six months' worth of expenses. If you ever lose your job, you'll be glad you did.
Invest for your retirement. If your employer has any type of defined contribution plan, like a 401(k), 403(b), TSP (Thrift Savings Plan), employee stock ownership plan, or profit-sharing plan, invest in it regularly. If your company offers a match, invest at least as much as you need to get the match; otherwise, you're giving up free money. If you work part-time or your employer doesn't offer a plan (or if you don't like your employer's plan), open an IRA to save for retirement.
Mitigate your risk by being appropriately insured. Currently, the individual health-insurance mandate requires that adults have health insurance or pay a fine on their taxes. Even if your plan doesn't cover everything, it will save you from financial devastation if you have an accident or unexpected health crisis.
If you have family or a business that would suffer from losing your income due to death or disability, you must get life and disability insurance. Term life insurance is fairly inexpensive. Even though thinking about death isn't fun, if you're financially adulting, you protect those who need you.
If you had to evacuate from your home, would you be able to grab your important documents quickly? Protect your important papers from ruin or theft by keeping them secure in a safe-deposit box, or a fireproof, water-resistant safe in your home. If you need to take them out to use them for something, secure them immediately when you are finished. Also, scan your important papers and save them to the cloud. If for some reason the originals are stolen or destroyed, it will be much easier to replace them if you have access to copies.
Financial adulting isn't always fun, but neither are other aspects of adulting like doing laundry or cleaning. However, becoming a master in financial adulting is important to many aspects of your life. Besides, next time you balance your checkbook, it will be fun to post to your social-media account that you're #winning at #financialadulting.
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