While you might not feel like early adulthood is a time to worry about financial planning, there are plenty of building blocks that can actually be put into place early on. It can be hard to think about future planning when it comes to finances, but there are simple habits and tips that can help shape your spending and financial goals for years to come. Here are five financial planning tips that all young adults should keep in mind as they navigate their financial future.
1. Making Self-Employment a Reality
These days, the younger generation is finding joy and also some challenges when it comes to self-employments opportunities. While jobs such as freelancing or contract work can be empowering, it can also come with risks. Securing your personal safety when it comes to things such as financial stability and health insurance might feel like competing needs compared to professional pursuits. If you can get started with small business assistance and financial planning from day one, you can make smart decisions throughout the process.
2. Understanding Different Types of Debts
While you might be reluctant to get yourself in any type of debt if possible, there are certain types of debts that are actually more strategic in the long run than others. College debt is something that has gotten a bad rap lately, but if you are able to combine this with college-based awards, working while going to school, and picking local or commuter colleges loans can be a great choice for your future. The worst thing you can do is run up credit cards or take out loans to pay for items outside of your income bracket, such as trips, new cars, and big-ticket items. Try to focus on debts that will build your future, and avoid those that would finance more superficial needs.
3. Looking at Different Support Systems
Another way to avoid racking up debt in early adulthood is to really research all areas in your life that might be able to provide support. Can you enlist a family member to invest in your budding company? Would a crowdsourcing platform be feasible? When it comes to down payments for homes and cars, could your parents loan you money interest-free? It is a good idea to run all scenarios by those around you instead of taking on high interest loans if you can.
4. Realistic Saving and Investment Options
While you might just be starting out your career path or not have much to save, it still might be a good idea to start small and lay the building blocks for your future. Even setting aside 5% of your income to retirements or investments will add up over time. When it comes to big investments such as purchasing a home, be sure to meet with a financial advisor to see where you are at financially. You may decide that you should wait a few years until you are more financially stable for large investments such as real estate.
5. Meet With a Financial Planner
While it might feel early on in your career or life planning to get some goals out on paper, a financial planner can help make your future goals a reality. Whether this is an action plan to put more money into retirement, how to invest, or a deadline to pay off credit cards, sometimes not feeling like you're in it along can give you the confidence and know-how to get out of debt and plan your financial future.
Protection, savings, and growth can all be put into action at all ages and any stage of life. Whether you are recently out of college, moving to a big city, or starting out your first job, getting started on financial know-how can give you a better chance at financial success in your life. If you aren’t sure where to start or how to outline your personal financial goals, contact us to get you started on the right foot.