Do These 12 Things Now to Set Your Finances up for the Next 20 Years
It’s so hard to plan ahead. It’s even harder to plan way, way ahead — like 20 years into the future. I mean, some of us have trouble planning more than a week in advance. I know I do.
Financially speaking, we should all be planning for the future — at least a little bit. The question is, how can you set yourself up for success in the future? What can you do with your money right now that you’ll be happy about in 20 years?
We’ve got some ideas. They’re mostly about improving your financial habits — with a little technological help.
1. Take 10 Minutes to Secure Your Family’s Future
Many of us would rather not think about death — let alone life insurance.
However, securing life insurance is an important financial move, especially if you’re married, have kids or are in your prime earning years. It pays your dependents when you die, which can help pay for your funeral, mortgage or other debt.
So if “get life insurance” has lingered on your to-do list far too long, take the next 10 minutes to figure it out. Don’t worry — it’s way easier than you think.
A company like Policygenius offers you an easy way to compare and buy life insurance. Unlike traditional providers, this online-only platform provides an easy way to apply, and it offers instant quotes from top carriers online to help you make a quicker decision.
To get your quotes, you’ll just enter some info about yourself and your health online. Once you choose a life insurance company, you can apply right online, and a Policygenius rep will give you a quick call to ask a few follow-up questions.
If you’re young and mostly healthy, consider purchasing term life insurance online from Ethos. It partners with a major A-rated life insurance carrier to provide policies for a low price. For example, $30 a month could get your family $1 million of coverage.
Anyone, including independent contractors, can secure term life insurance through Ethos without a medical exam or extensive paperwork; just fill out a digital application.
2. Spend Less on Car Insurance
Car insurance will likely be a constant expense for you. That’s why it’s worth shopping around for a new policy every now and then. (Most people don’t bother.)
Just like you compare the prices of flights, shoes and laptops before purchasing, why not compare car insurance?
The Zebra, an online car insurance search engine that offers “insurance in black and white,” compares your options from 204 providers in less than 60 seconds.
3. Lower Your Interest Rates
Target that credit card debt first. A lot of us are being crushed by credit card interest rates north of 20%. If you’re in that boat, consolidation and refinancing might be worth a look. Pay off your high-interest debt with a lower-interest personal loan
Here’s an easy way to do that: Fiona, a search engine for financial services, can match you with the right personal loan to meet your needs.
Fiona searches the top online lenders to match you with a personalized loan offer in less than 60 seconds. If your credit score is at least 620, its platform can help you borrow up to $100,000 (no collateral needed) with fixed rates starting at 4.99% and terms from 24 to 84 months.
4. Invest Your Spare Change
Set things up so a certain amount of your money gets automatically funneled into savings, investment and retirement accounts. That way, you can build wealth without thinking about it.
To automate your investments, consider starting an account with Acorns. Use its “round-up” feature. That means if you spend $10.23 at the grocery store, 77 cents gets dropped into your Acorns account.
Then, the app does the whole investing thing for you.
The idea is you won’t miss the digital pocket change, and the automatic savings stack up faster than you’d think. For example, we reviewed how Penny Hoarder Dana Sitar was able to save at a rate of $420 a year!
The sooner you start investing, the better off you’ll be 20 years from now.
5. Get Your Credit Under Control
Keeping tabs on your credit score and your credit reports can help guide you to a financially healthier life — especially if you use a free credit-monitoring service like Credit Sesame. It gives you personalized suggestions for improving your credit.
The better your credit, the better off you’ll be when you’re getting a home or car loan. Credit Sesame can estimate how big a mortgage you might qualify for, for example.
In the long run, you’ll be in good shape if you maintain good credit and deal with your debts. If you’re smart and strategic about this now, it’ll pay dividends over the next couple of decades.
6. Get a Free Look at the Health of Your 401(k)
If you’re like most people, you have no idea whether you’re on pace for retirement or just sputtering along. Chances are your 401(k) could be doing a lot better.
Take control with help from Blooom, an investment advisory firm that can optimize and monitor your 401(k) for you.
It just takes a few minutes to get a free 401(k) analysis that will show you whether your investments are allocated properly and whether you’re losing money paying hidden investment fees. It’ll even tell you just how much more money your account could earn by the time you want to retire.
After that, if you sign up, it costs $10 per month to have Blooom monitor and maximize your 401(k). Bonus: Penny Hoarders get the first month free with the code PNNYHRD.
7. Kill off High-Interest Debt
Most of us have got debt — student loans, car loans, credit cards, maybe a mortgage. But not all debt is created equal.
Be strategic. Pay down your high-interest debts first (while still paying the minimum balances on all your other debts).
That way, you’ll spend significantly less money on interest payments over the long run. As the years pass, your high-interest debts should start to disappear. In 20 years, you shouldn’t have any.
This is commonly called the debt avalanche method.
Your highest-interest debts are probably your credit cards. And at the bottom of the list? Probably your federal student loans, which tend to come with favorable interest rates and flexible repayment options.
8. Get a Free Assistant to Help You See Where Your Money Goes
An integral part of managing your money is budgeting. Ew, gross. We know. But it’s important to take a good look at what you’re spending and understand where you can cut back.
We’re not asking you to radically change your life. That’s not realistic. You don’t have to suddenly start living like a monk or anything.
Still, to set up your finances for the next 20 years, it’d be smart to establish some new habits.
An easy way to automate this process is to use Trim, a little bot that’ll keep track of all your transactions.
Connect your checking account, credit card and savings account for a big-picture look at your spending habits. Then, take a closer look by checking out each of your transactions. Set alerts that’ll let you know when bills are due, when you’ve hit a spending cap or when you’ve (hopefully not) overdrafted.
Best part? It’s free to sign up.
9. Cut Your Food Budget
Groceries will be a huge part of your budget for the long run, so it’s worth taking a few steps to shop smarter. Here are our favorite tricks to save money on groceries:
- Look for free printable coupons.
- Compare your local grocery prices using this worksheet.
- Earn cash back. Ibotta pays you cash-back on purchases if you take pictures of your grocery store receipts. Plus, you’ll get a $10 bonus for signing up!
You’re building your dream life. The more you do to protect it now, the better off you’ll be in 20 years.
10. Let This App Save for You (and Get $5 Free!)
Automate, automate, automate. Harness technology, and make it do the work for you so that in 20 years, you’ll be prepared for the next step, whether that’s buying a new home, traveling the world or retiring.
It helps if you can save money without really noticing it.
Digit makes that possible. Link the app to your checking account, and it will determine small (and safe!) amounts of money to withdraw into a separate, FDIC-insured savings account.
Bonus: Penny Hoarders get an extra $5 just for signing up. Additionally, savers will receive a 1% bonus every three months. Digit is free to use for the first 30 days, then it’s $2.99 per month afterward.
Pro tip: In the long run, you’ll need a smart place to store your savings. There’s no law that requires you to bank the old-fashioned way — at a brick-and-mortar bank with a crummy interest rate on your savings.
11. Get Your Paycheck 2 Days Earlier
Want to get a jump on payday? Let Chime be your secret weapon.
Unlike most financial institutions, this online bank account doesn’t wait until your pay date to give you access to your money. As soon as it receives notification of a direct deposit from your employer, it immediately posts those funds to your account.
The app is $1 a month, and you’ll get a $5 bonus when you sign up.
12. Get a Side Gig
In 20 years, you’ll want to be making more money. Ultimately, that’s up to you and your career path. In the meantime, we’ve got a couple of shortcuts to help you pad your bank account.
To set yourself up for the long term, it helps to have more than one source of income. Look for ways to earn extra money on the side. Here are a few options:
- On Rover you can choose to offer a variety of services, including dog walking, overnight boarding at your home or theirs, and daycare. Rover says sitters can earn as much as $1,000 a month — just for snugglin’ pups!
- As a partner driver with Uber, you’d be an independent contractor. You’d set your own schedule and drive as much or as little as you want. You must be at least 21, have a valid driver’s license and pass a background check. Your car must be a four-door, registered in-state and covered by in-state insurance.
- List a guest room on Airbnb, which could help you make hundreds — or thousands — in extra income each month. We’ve discovered you can list just about anything through the platform, including couches and backyard tents.
- Here’s our guide to making extra money online.
- Here’s our beginner’s guide to earning passive income.
Bonus: Use a Rewards Credit Card
To earn a little extra cash, look at getting a rewards credit card. The rewards can really add up over time.
For instance, an option like the Chase Freedom Unlimited card* enables you to earn an unlimited 1.5% cash back on all your purchases. (Hello, grocery store!) Plus, if you spend $500 in your first three months of opening the card, you’ll pocket a $150 bonus.
Keep in mind that there are different types of rewards credit cards, so make sure to get the kind that works best for you:
- Cash back credit cards are the simplest, because they just give you a portion of your spending back as a rebate.
- Travel rewards cards offer miles, flights, hotel stays, car rentals and more.
No matter what, make sure to pay off your bill each month so you’re not paying interest on a balance.
*The information for the Chase Freedom Unlimited card has been collected independently by The Penny Hoarder. Opinions expressed here are the author’s alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. The Penny Hoarder is a partner of Credible.
Mike Brassfield ([email protected]) is a senior writer at The Penny Hoarder. He tries to plan at least a couple days in advance.