How many times have we said, “If only I had known better”? Or what about, “If I knew then what I know now”? Well, this month’s column addresses those questions from a financial perspective. For the younger audience who happens to read this, I hope this advice is beneficial as I share lessons I’ve learned the past 20-plus years as a financial advisor.
When we are in our twenties, the focus is on the day at hand. Maybe we are concerned about graduating from college, serving in the military, finding a trade or securing that perfect job. The mantra is “live for today and tomorrow will take care of itself.” And exactly where does financial planning and stability fall into this picture? IT DOESN’T!
Here are a few things I would suggest to my younger self:
- As soon as I secured my first real job with benefits, I would find out the guidelines of the company 401K program or if they even have one. If so, do they match contributions? Up to what percentage? Any stock options?
- After gathering all of the above information, I would contribute the amount the company matches. For example, if they match up to 5 percent, then I would contribute 5 percent of my earnings, and forget about it. Learning to live without a certain amount of money early in life, teaches discipline while building savings. If there is company stock available for purchase, I would treat myself to a few every year.
- Next, I would create an emergency fund. Even if it means putting just $10 or $20 away per week, that type of money adds up. It would be there for me in the event of an emergency such as a car repair, unforeseen travel or maybe a down payment on a significant purchase.
- Once I get settled in my job, I would begin my quest to develop a stock portfolio. It costs nothing to have an initial conversation with a financial advisor, so I would speak with a professional about my financial future and how to get started in the market.
- Last but not least, I would get life insurance. It’s no secret that the young- er you are, the less your policy costs. No one knows the day of our demise, so it is better to be prepared than leave family and loved ones with an additional, unexpected financial burden. As you get older, you can always adjust the terms of your policy and add more coverage, but get something now!
For those of you who are reading this and you are no longer in your twenties or thirties, there is still time to play a little catch-up. Go ahead and up that contribution to your company’s 401K plan. Think about picking up that side job for side passion that brings in additional funds to increase your savings. Finally, make an appointment with a financial advisor to map out your retirement plan. This includes any final wishes, your will and any other personal matters that impact the ones you love.
When you treat your financial matters with greater urgency, the long-term forecast of your finances tend to have a better outlook.
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*Securities and advisory services offered through Woodbury Financial Services, Inc., member FINRA/SIPC. Insurance services offered through Atled Financial Group 717 B Main Street Schererville, IN 46375 which is not affiliated with Woodbury Financial.