What does financial planning mean to you?
When you hear the term "financial planning", what do you think of? I don't think most people often associate the term with young people. That's a big problem though because early financial planning can have lifelong benefits. Financial planning goals can vary depending on your age. Look below to see a list of some common goals for young adults.
Paying off Debt
- Student Loans
- Credit Cards
- Car Loan
- Emergency Savings
- Disability Insurance
- Big Purchases (Home)
Paying off Debt
- Take a look at any debt you have and determine how much you can afford to pay off each month and give yourself a target date to have it paid off by.
- Keep credit card debt as low as possible, ideally pay off your entire balance on time every month.
- Start building up some emergency funds for when your car breaks down or you drop your phone in the toilet (it happens!).
Disability insurance - not a lot of young people consider this a need; however, what would happen if you injured yourself tomorrow and could no longer work?
- Whether or not you work in a high-risk job, disability insurance is worth the cost.
- Generally, costs about 1-3% of your salary
Large future purchases- start saving now to meet your goal quicker
- If you know you want to buy a house at some point, start saving for a down payment of at least 20% of the home price to avoid having to pay private mortgage insurance and save yourself money.
- Start investing for your retirement! You are never too young to start putting money into a retirement account. We can’t impress enough how compounding interest can do wonders to help grow your retirement account balance and the earlier you start, the more time you give your money to grow.
Set aside a couple of hours on the weekend and start your own financial planning as soon as you can. By understanding your personal finances and giving yourself goals, you are giving yourself the greatest shot at success in the future.