(collaborative post) The use of “adult” as a verb is a fashion that arrived on the scene sometime in the last decade and has stuck around. While there is some dispute over what it takes to get “adulting” correct, most of us would agree that an ability to take charge of our financial choices and make “grown-up” decisions about them is a priority. Once you’re earning actual money, you could make that childhood dream come true and spend all of your money on sweets; but the paradox of being old enough to do that, is that you’re also grown-up enough to know better.
The question is, which financial decisions do you need to give more thought to as an adult? Knowing that your decisions actually have real-world consequences will, no doubt, focus the mind. It won’t necessarily make the decisions easy. However, as some of the big ones have pros and cons either side, making a final choice can feel quite imposing. It’s worth looking at how you might arrive at a decision on some of the big financial choices that you may make as an adult.
Should You Rent or Buy Your Home?
Everyone needs somewhere to live. In adulthood, most of us will look to find somewhere of our own. Few of us are fortunate enough to be able to simply buy a house. Therefore, you’re left with a one of those tricky financial choices. Do you take out a mortgage, or rent a home from either a landlord or a local authority.
For many, the former is the obvious choice. Yes, you will have to pay back the mortgage over time, but it does give you the autonomy of “owning” the place you live. We’ve always found Rightmove a great place to look for a new property. As a renter, you could be asked to move out at any time, or may be the subject of unfair treatment by a landlord. Also, monthly mortgage payments are usually considerably lower than rental costs on an equivalent property.
So is the decision straightforward? Not exactly. Buying a house does mean you’re tied into the property. So if an opportunity comes up that requires you to move, things will get complicated. You’re also at the mercy of market forces. It’s important to stay on top of financial news such as interest rate changes and the like. The peace of mind that you’d expect is not always there in reality.
Which Insurance Do You Need?
Insurance is another of those financial choices we all need to consider as we get older. It is worth thinking about no matter whether you’re newly adult or have a few decades on the clock. There are countless different types of insurance that you may be minded to consider, from home and contents insurance, health cover and life insurance. Which ones are essential, and which are useful to have?
Well, if you are a driver, car insurance is the absolute bottom line; you cannot legally drive if you aren’t insured. If you own your home, then home insurance is probably a sound choice. You can’t always rely on a landlord or management company to pay for any repairs. Life insurance may not be compulsory, but it is undoubtedly a good idea to look into the likes of discountlifecover.co.uk. It’s reassuring to know that your loved ones will be looked after when you’re not around. For similar reasons, health insurance is worthwhile if you can afford it. Even if you have the chance to use public healthcare, private insurance can lessen the stress and allow you to get treatment much faster.
Do You Need a Pension?
It is hard in early adulthood and even when we become middle-aged to think about retirement and living off savings. Nonetheless, as you can see at gov.uk, the day when you are eligible for a state pension will come, and when it does you will either have a private pension to top it up or you won’t.
The question is, should you?
In truth, if you have a savings account, and tend to save money anyway, then it makes sense to have a pension. Especially if your employer is part of a scheme whereby your contributions are taken directly from your salary and matched pound for pound by the company. Pensions are a way of saving money tax-free. Having some extra cash saved when you come to the end of your working days could well be one of the smartest adulting decisions you make.
What financial choices do you/did you most dread as an adult?
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Written by Melanie Edjourian.
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I’m an adult yet I’m still awful with finances. Yay mental health thanks for that trait. I would love to be able to own my own home one day – at the moment we rent, but I don’t think I ever will. I do have a LISA which I will use as a pension though I guess.
You never know what may happen. You may have your own home in the next 5 years. We really don’t know what the future holds.
I don’t think you really realise what adulting is until you’ve gone through buying and selling a home!
Ha, yes that’s fun isn’t it!!!
We’re currently going through a house move, so we’ve had some big financial decisions to make recently and its daunting! Planning for the future is the scariest thing, especially as its unknown x
Oh wow, I hope it all goes well.
All took some learning from and sure some mistakes along the way too. We rent right now but saving up for a mortgage. Choosing insurance is a must because you never know.
Hopefully it won’t be long until you have your own place.
The pension question is one I continuously go back to as an adult – I really should start saving for one soon.
It is important o make sure you have money set aside.
These are great tips to plan and something young adults should think about so they can retire early when they are older. Investing in insurance and being aware of pension options is so important
It’s good to be aware and put things in place early.
I think working out how to balance all of bills and outgoings was the thing I dreaded most about turning an adult, and it’s tough sometimes but we manage it x
It’s not fun, but has to be done unfortunately.
I have kids just starting out on their adult lives and it is important that they choose the right insurances etc. My daughter has just bought her first home and my son has just put a deposit down on his first flat with his girlfriends – exciting times
Wow, that does sound exciting. I hope all goes well for them x