Planning & Research: Establishing Roots - T. Rowe Price

At this stage in your life, you may be taking on new commitments like marriage, starting a family, or purchasing a home. Budgeting and having an emergency fund are now more important than ever because there are more and more demands for your money. You should also consider buying life insurance to protect yourself and your dependents from unforeseen events.

Establishing Roots Tips

Here are ways to meet your financial obligations while putting money away for retirement.

You and your spouse should continue contributing 15% of your income to tax-deferred retirement plans despite other financial commitments. If either of you leaves the work force (for example, to raise children), consider opening a spousal IRA, which will allow you to continue contributing for retirement even if you are not receiving an additional paycheck.

A 529 College Savings Plan account is a tax-advantaged way to help you reach your college savings goals. Saving early can put the power of time and earnings potential on your side.

Life insurance will help supplement lost income for your family in the event something happens to you. Be sure to purchase a policy that will sufficiently cover your household and other expenses.

Draw up a will to direct how your property and other assets should be dispersed upon your death. Without a will, your state of residence will distribute your assets according to its laws. If you have children, be sure to appoint a guardian; otherwise, a court will make this decision for you. It’s also important to consider a durable power of attorney for your finances and medical care. Power of attorney should be given to someone you trust. He or she will have the authority to act on your behalf should you become incapacitated. You should also update the beneficiary designations on your retirement accounts for life-changing events such as marriage, birth, divorce, death, or a job change.