8 Adult Things You Might Not Think You Need Yet (But You Do)
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8 Adult Things You Don't Think You Need To Know But Should Because Growing Up Doesn't Come With A Manual

"Alexa, what's a good credit score?"

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8 Adult Things You Don't Think You Need To Know But Should Because Growing Up Doesn't Come With A Manual

How much should you include in an emergency fund? How does a budget work? Is a retirement account really necessary?

All of your questions, while crucial, can be hard to figure out. If you're currently making the transition to adulthood, here are eight things you don't think you need yet... but totally do.

1. A Good Credit Score

Your credit score is a number between 300 and 850 that shows your "creditworthiness," or how reliable you are at repaying debts.

The higher the score, the better. Bad credit — or worse, no credit — can prevent you from reaching certain milestones, like buying a house or financing a new car. Some employers even check a candidate's credit score before offering a position. Many argue a credit score reflects responsibility in all aspects of life, not just finances.

2. A Detailed Will

A will makes it simple for family and friends to sort out your estate after you die. It outlines two crucial roles: the "executor," the person in charge of organizing and dispensing possessions, and the "beneficiary," the person receiving the possessions.

A will is critical because if you die without one, your estate is doled out to your next of kin, a spouse or children, for example. A will is especially important if you have children, as the document dictates who receives custody.

3. An Emergency Fund

Emergencies are unpredictable, they can happen at any time. You might receive a diagnosis that requires an extended leave from work. Even without an income, you'll still face bills like rent, groceries, electric and more.

An emergency fund helps maintain the status-quo as you recover. As for the amount of money you should save for these types of situations, experts agree that an emergency fund should cover living expenses for six months.

4. A Goal-Oriented Budget

When you don't have many expenses — like a mortgage, home insurance, car payment, etc. — it's easy to splurge. You have plenty to spend, right? But a budget isn't just for those with limited cash. It can be a great way to set and reach large financial goals.

First, look at your monthly gross income, then account for where each dollar goes. For example, say you want to save up for a house. You can set aside a monthly sum of $300 to save for a down payment.

5. A Retirement Account

There are several types of retirement accounts. Research each one before you make a final decision to determine which best fits your needs. Some common types of retirement accounts include an IRA, Simple IRA, SEP IRA and Roth IRA.

- IRA: an individual retirement account where you contribute up to $6,000 annually.

- Simple IRA: a retirement account that small business owners can set up with less hassle.

- SEP IRA: a simplified employee pension, used primarily by freelancers and small business owners.

- Roth IRA: an account with no tax deductions, however, the money you earn in interest is tax-free.

6. A Life Insurance Policy

Most younger Americans don't think they need or can afford a life insurance policy. Some choose a retirement plan or travel in place of a policy. Plus, two-thirds of Millennials don't understand how life insurance works.

However, it's a mistake to think insurance is only for older couples. It's typically much cheaper to buy life insurance when you're young, and you gain all the same great benefits. Setting up a policy is a simple and affordable way to care for your loved ones after you're gone.

7. An Investment Portfolio

Investing may not cross your mind when you're young, but you can learn a lot about the process — and significantly build your savings — if you start sooner rather than later. Mobile apps like Acorns and Robinhood make it easy to start small with investments.

You can buy stock in your favorite brands, like Apple (AAPL), Google (GOOGL) and Sony (SNE). Receive daily updates on how your stock is performing. Plus, you can buy, sell or trade as needed, all from your smartphone.

8. A Growing 401K 

A 401K is a type of retirement plan sponsored by your employer. Before taxes are taken out, you can designate a chunk of money from each paycheck to go into it. Your employer will also match those funds up to a certain amount. Most employers match up to 3%.

With this type of account, you control how you invest your money, with most funds composed of stocks, bonds and money market shares. One restriction you face with a 401K is the inability to access funds immediately. Pulling funds from your account before the set deadline can result in costly penalties.

Understanding this whole adult thing is hard. Don't worry, we're all just figuring it out as we go along. However, if you want a secure future, it's important to get started now.

Things like a life insurance policy or a 401K can have a significant impact down the road.

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