What I would tell my 20 something year old self!
As parents we devote all our heart, soul, time, and energy into our little ones, developing them to be smart, happy and someday successful. When it comes time for them to leave the nest it can be difficult on everyone! At least, so I hear!
I have to admit I do daydream from time-to-time what life will be like with a quiet, clean house HA! But we all know I’ll be so bored I will hunt them down and find them just to give them one more squishy hug!!
I hear a lot from client and friends who are in these seasons of life and they always seem to have the same concern…. How do I start my children off on the right foot financially? So here is the best advice I can give.
THINK LONG TERM NOW
As soon as you start your first job, no matter what your pay and hours are, start a Retirement plan as soon as possible AND contribute 10% of your pay. When you get used to doing this from the very beginning you won’t miss the difference you are saving in your pay. Additionally, in general, with time the value of your money will grow faster as it compounds on itself. (Your older self will thank you!)
Most importantly learn to live within your means!
What does this mean? Always know your #s. Know how much are you spending on the “Needs” and how much are you spending on the “Wants” and learn the difference. When advising clients, we recommend keeping those expenses for “Needs” to 50% of your take home (after tax) income.
As we begin to earn money it is important to always have a backup plan for when “Life Happens”. We strongly encourage you to slowly build up a savings account at your local bank to be at a minimum 6 months living expenses. Because LIFE WILL HAPPEN, whether it is temporarily losing a job, unexpected medical bills, car repairs and so on! This will make life easier as you get older.
Tithe every month! Set up 10% of your pay to automatically go to your charity of choice. Set this up when you are setting up your retirement savings. Set it and forget it.
Just like purchasing car insurance to cover our vehicles, or home owners to cover loss of our homes, it is important to cover loss of life. Some day we will die and there are expenses associated with our final arrangements. Sadly, as all of us have learned, some of us will die earlier in life and leave behind people that counted on our incomes to live. Be sure you are protecting these loved ones and buy life insurance while you’re young and healthy. It will be so much cheaper! Discuss with an expert on how much and what type to purchase.
Meet a financial planner early on and get comfortable with discussing money. They will help you through life’s financial decisions! Let experienced professionals, like Haven Financial Planning, help you like your annual checkup with your physician on health.
Ready to take the first step towards financial independence? Contact us today to get started!