The Importance of Financial Planning in Your Adult Years: 20’s & 30’s
Many of us believe that we should only look into financial planning when we’re thinking about making a large purchase or simply want to readjust the manner in which we budget.
Nonetheless, a truly rewarding financial plan has the ability to follow us through every stage of our lives and influences much more than our bank accounts. We live in a world where a little more than 40% of baby boomers do not have a will and more than half of Americans do not budget or simply do not know how to budget. Moreover, only 31% of household financial decision-makers reportedly say they have utilized any sort of financial plan.
There are many reasons why individuals don’t feel the need to plan. Among them are:
- “I’m too young to plan”
- “I’m too old to plan”
- “Do I really need one now? , I’ve made it this far without it”
Whenever the need for financial planning comes into question, its best we remember that financial planning:
- Financial planning does not happen on it’s on
- Is not something we can forget about
- Financial planning should not only be thought of when your funds are low
- Your financial plan will need to be flexible. It will need to change just as your situation does.
Here are a few ways you can financially plan starting from your 20’s:
Planning in your 20s
It is important that we keep in mind that it is never too early to start planning for your future. Your 20’s are the perfect time to establish the foundation and set yourself up for the rest of your life. This is most likely the time you will begin earning your first full-time salary and also your first time dealing with full-time student loan debt. Financial obligations at this stage might include:
- Car loans
- Car insurance
- Student loans
- Being a first-time renter
- Opening up your first savings account
The good news is, most of your major life events are still possibly way of you. Consider setting up a meeting with a financial planner during this time. Doing so can help to improve your financial literacy, create a spending plan, develop an “emergency fund”, and most importantly establish good credit.
Planning in your 30s
Welcome to 30! At this point, you may or may not have used your 20’s to build a solid financial foundation. This is the time to use everything you learned in your 20’s to teach yourself how to deal with shifts and new challenges in your life.
Financial obligations you may face at this stage include:
- Starting a family
- Owning a home
- Career change
- Acquiring life insurance
- Establishing an estate plan
- Establishing a living will and power of attorney
As exciting as these new endeavors may be, they are all still very big transitions. And along with these large transitions come larger origins of debt. With that being said, it is essential to understand that the financial goals of at this stage in life should be to eliminate as much debt as possible and develop a more comprehensive plan for retirement.
Oh, and remember that emergency plan we talked about creating in your 20’s? This is is a great stage to check in on that emergency fund and ensure you have at least 3-6 months worth of income saved up. This will be undoubtedly useful should you find yourself in crisis.