Life insurance. Generally you only need life insurance once someone is depending on your future income.

If you plan to have kids, you should start thinking about the situation your survivors would be in if you passed earlier than expected. Life insurance can help pay off your mortgage or other debt, as well as provide assets for your survivors to live on.

Estate plan. One common myth is that estate planning is only for the wealthy. Think you’re too young to think about your estate plan? Think it doesn’t matter? Consider this: Everybody has a “default” estate plan at birth, defined by your state’s laws. When you die, your “estate” (i.e. house, cars, personal belonging, brokerage accounts, etc.) goes into a process called probate.

When someone passes away without a will, an “intestate estate,” formally known as a “Last Will and Testament” kicks in. The probate law defines how the estate gets divided and disbursed, and is pursuant to some general rules. For example, if you’re married, your spouse gets it all, and if your spouse isn’t around, your kids get it all. Some of these rules might be illogical depending on your situation.

And for kids, there are usually no default rules about guardians. Once I looked into the default rules for my state, I realized I wanted control over what happened to my estate when I pass away.

It is worth the awkwardness to think this through and plan. When thinking about this consider that you likely need a will, advance directive for healthcare, and durable power of attorney, the last of which is a legal document giving someone else the power to act on your behalf should you be unable, due to death or disability.

Dependent care deductions. Ask your HR department about these deductions. These can help pay for childcare, using pre-tax earnings.

Education. Start to save for education. You might have heard about 529 plans as a way to save tax-free for a kid’s education and maybe even get an income tax break. It’s sort of like a Roth IRA for educational expenses. Some states let you deduct your 529 plan contributions on your state income tax return, up to your state’s limit.


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