Congratulations. You’ve just graduated from college and now you are looking at a five-figure student debt load on top of car lease payments, rent, food, clothing, entertainment, utilities…
You might think that financial planning is not something you can even consider right now given your current situation. The good news is that it is never too early to start planning your financial future, even if you are in a position where you feel you are too broke to begin.
The Run Down
- You aren’t too young to start planning your financial future.
- You don’t have to be rich to create a financial plan.
- Financial planning isn’t just retirement.
- Investing is only a small part of creating a plan.
- You don’t have to make sacrifices in order to save money.
Retiring might seem to be a very long way off, but it’s not the only reason to start planning. The sooner you start, the better off you will be.
You’re too young to start planning for your future.
When it comes to something like your personal finances, it can never be too early to start creating good habits, like making a budget, paying down your debt, saving for big events in your life, and balancing your wants versus your needs. Don’t forget, compound interest and time will factor into how much money you will ultimately have available for things like a wedding, children, their education, and your retirement. The earlier you start saving, the more interest you will accumulate over time.
You don’t have enough money to start financial planning.
This isn’t something that only the wealthy do; this can help you to save money in ways you might not have considered. If you don’t have much in the way of savings or if you don’t have a clear idea of where your money is going, financial planning will help you to identify what you need to do. There are a number of tools and applications available to help you to create a budget, take advantage of tax breaks, and lower your debt interest, even consolidate your debt into one manageable payment.
Things will be cheaper when you are old enough to retire.
Unfortunately, this isn’t the case. Many unexpected and expected expenses can add up. Plan ahead for retirement and talk with a professional to better understand what you need to save for.
You can help your credit score by closing unused credit cards.
Paying down your debt is a a wise decision, but closing credit cards that you no longer own money on is not. Be sure to keep those cards in a safe place and to monitor activity to ensure they stay unused. Unused credit cards in good standing can reflect positively on your credit history.
You have to invest, invest, and invest when it comes to financial planning.
Actually, you don’t. You might not invest at all. Good, solid financial planning includes budgeting your household expenses, taxes, retirement savings, estate planning, debt management, risk management, and investing if you choose to.
Financial planning is all about retirement.
While that is a part of it, financial planning doesn’t only focus on the future or your retirement. A good plan involves thinking about your wants and needs as they are now and determining how you can effectively save for the future without making huge sacrifices or putting your life on hold.
