You just graduated college and you want to have some fun and enjoy your new income. You just got married and you don’t want the stress of talking about how to combine your finances. You just had a kid and you don’t think you have the time figure it out. You don’t have enough money to work with a financial planner. There are so many excuses that young professionals make to avoid becoming financially responsible at an early stage in their careers, but you shouldn’t wait until your 30s or 40s or 50s to take responsibility and start being intentional about your financial life. Time is the biggest asset that young people have on their sides.
Develop Good Habits ASAP
Developing good financial habits at a young age is something that can benefit young professionals for the rest of their lives. It’s so much harder for those who have been practicing bad financial habits for 10 or 20 years to change them and begin living a different lifestyle than it is to live a sustainable lifestyle from an early age and develop positive financial habits that will lead to a long-term successful financial life. The decisions that you make when you’re young will affect the rest of your life and can make things much harder or much easier, depending on the choices that you make now.
Waiting to work on your personal finances because you think you’ll be in a better place to do so later is a mistake. Not only could you develop poor financial habits that become ingrained in your daily life as mentioned above, but you could miss out on years of saving and extremely valuable compounded returns. Learning to live within your means isn’t the easiest thing to do for many people. There are so many temptations for your money and we live in a world where instant gratification and “stuff” are placed on a pedestal.
How A Financial Planner Can Help
If you’re not sure what financial planning is, then check out this post before you continue reading.
A financial planner can help young professionals use their money to live a life that they love while maintaining financial prudence. They can help to prioritize goals and allocate resources to align with those goals and a young professional’s values.
Yes, there are some people who do everything right financially and don’t need a financial planner to help them. However, there are also people who do everything right financially and still value the guidance of a trusted advisor and knowing that there is a professional who is working alongside them to make sure that they’re making the best decisions for their personal situation.
Young professionals face tons of questions about their financial lives that they’re not prepared to face themselves beyond how much they should save for retirement:
- What if you were to lose your job tomorrow?
- Do you have an adequate emergency fund in place? Where should you keep the money?
- What if you became disabled and couldn’t work? How would you support your family?
- Or, worst case, what if you died? Sure, you might have life insurance in place, but is it enough? Would you want your young children to have full control of all of your assets?
- How much house can you afford? Should you even buy a house right now?
- Do you plan on saving for your child’s college education? How much? All of it? Half? As much as you can without sacrificing your own goals? What’s the best account to save in? How much do you need to save for college?
- What employee benefits elections should you make during open enrollment?
- Should you be paying extra towards your student loans?
- What assets should you invest your retirement account in?
- Should you buy stocks? Should you sell when you see the market in flux and read negative financial headlines? Should you buy that hot stock you heard about on TV?
- Should you invest in a Roth IRA?
- Are there things you can be doing to save money on taxes?
These are all questions that young professionals have that financial planners can guide them through.
Financial Partner
A financial planner serves not only as someone to help young professional with their financial decisions, but also as a coach, sounding board, and accountability partner.
There are so many decisions to be made when you’re young that will have lifelong impacts on your financial life and here are so many people trying to sell young professionals financial products that are exactly what they do not need. it’s really easy to make mistakes. What young professionals truly need is a fiduciary financial planner that always works in their best interest and is there to help them not only build a solid financial foundation, but also to help them along the way as they progress through their life and career.
A lot of people begin their careers only contributing enough to their retirement accounts to receive the match and making minimum payments on their student loans. However, only contributing enough to receive the match means that you’ll probably start quickly falling behind where your retirement savings should be (unless your goal is to work the rest of your life). Once they realize this or get a raise and decide that they want to start doing something more, they have the question of whether they should pay down their debt more quickly or save more.
Starting a career or a marriage with a strong savings rate is one of the smartest things that young professionals can do. Increasing that savings rate each year, even if only by 1% (which you won’t even notice), is a great idea as well that can have a huge long-term impact.
Saving a significant amount of income helps to not only increase your retirement assets, but also directly helps to decrease your living expenses. You don’t want to reach retirement and have to significantly decrease your standard of living because you’ve been spending such a large part of your income that’s not sustainable once you leave the workforce.
A financial planner helps you to think long-term about decisions such as this and prepare for the future while helping you to make choices like saving more or paying down debt more quickly. They are there not only to help you today, but to walk alongside you throughout your financial journey and help guide your path.
Connections
Financial planners have connections to other professionals such as CPAs, insurance agents, estate planning attorneys, realtors, mortgage brokers, etc. who they believe will be the best for your situation. That way you don’t have to worry about if the person who is trying to sell you a product is actually selling you something worth buying. Your financial planner can act as a neutral party and help you evaluate the product or service and give you a recommendation of what’s best for your personal situation.
Lifetime Benefits
Young professionals have a ton of financial decisions to make that they haven’t been prepared for through high school or college. A financial planner can help to guide you through tough financial choices, create goals and prepare for the future, act as a coach and accountability partner, and provide referrals to other trustworthy financial professionals. Waiting to get serious and take control of your financial life is a mistake. Take the steps outlined here to find a trustworthy personal financial planner who can help you make good financial decisions that will benefit you for a lifetime.
You may have access to all of the personal finance information that you need, but there’s no value in information without action and there’s no value in action without knowing the accurate and appropriate action to take to apply that knowledge to your specific situation.
