The population of 30-to-44 year-olds in the U.S. will rise by more than 2 million over the next five years. As they begin to experience the benefits of growing income, many in this group will buy homes and cars and maybe even start businesses at a higher rate than our economy has experienced over the past several years coming out of recession.
While many of them are focused on building the career, family and lifestyle they want, they may ask themselves many short-term questions dealing with the here and now of living life. But it’s also important that as more discretionary income enters their budget, they are diligent in asking themselves long-term-oriented questions about how they can best pursue financial security. For each extra dollar they can save, what is the best use of it?
Since most people spend more time assessing their vacation options each year than assessing their finances, many will fail to ask themselves these important questions at a critical time when they can shape their finances for the rest of their lives.
Hopefully everyone already considers the basic questions of personal finance: Am I living below my means? Do I have a cash reserve for emergencies or unexpected expenses? Am I making the best use of my employer-provided benefits? Is my family protected if I die or can no longer work?
When these questions are addressed, it’s time for a series of questions that aren’t asked often enough or answered thoroughly enough. If these questions aren’t simply answered by personal knowledge, they should not be skipped. Consulting peers, parents and advisers may be very valuable at this stage.
Remember that in short periods, luck will have a significant influence on any investment outcome. Over time, with sound planning and answers to questions like these, you’ll remove much of the luck from the equation.