Financial Responsibility: Never Too Early to Start

In today’s society, there has definitely been a shift in how young people view finances.  Financial planning that used to be commonplace is now a rarity, and young people in their 20s (and even 30s) are making some financial mistakes that could affect them for years to come.

Here at Carroll Marshall, we want to see our clients be protected and financially successful, from their youth all the way through retirement.  So, what mistakes should you avoid if you are young and just starting out?

First of all, don’t disregard saving.  While paying off debt, and building credit are great financial decisions when done correctly, if you sacrifice building your savings, you are potentially putting your entire financial situation at risk.  Consider this: if you have paid off debt, but have failed to build any significant savings, what will happen if a large bill (such as a medical emergency or a vehicle repair) hits all of a sudden?  You will be left scrambling to cover costs, which is stressful and can do some serious damage to your monetary plans.  Did you know that, on average, saving 20% of your paycheck each month can make you a millionaire if you start while you’re in your twenties?  While not everyone can save this much, or on this exact schedule, it’s wise to determine how much you would like to save each month, and commit to putting that money aside.  You’ll be surprised how quickly it accumulates and grows!

Secondly, do attempt to keep debt at a minimum by limiting spending you cannot afford up front and by paying off existing loans. Debt usually means you are not only paying off what you have spent, but also a percentage of interest.  That’s “free money” for the loan provider, and it means you are losing out on cash that could be thrown toward other, more important things (like your savings discussed above!).  Unfortunately, we see young people falling into the trap of taking out loans that are unwise (such as taking out a loan for paying wedding expenses) or taking out loans too early (like trying to buy a home before being financially ready).  Be smart when planning weddings or purchasing a home, and pay as much as possible with money up front, or downsize costs to better meet your existing budget.  Tackle debt such as credit cards, student loans, etc. with a plan you can stick to, and make sure it’s reasonable.  Don’t put yourself into dire straights because you are desperate to pay off debt.

Finally, plan ahead.  Making mistakes such as leaning on your parents, overusing credit cards, etc. mean you will end up with some serious financial issues in the long run.  Make sure you are planning for retirement as early as possible, and don’t hesitate to set up a long-term financial plan starting in your twenties.  Also, make sure you are protecting yourself, and your assets (home, vehicles, valuables, etc.) by carrying the appropriate insurance policies.  Life insurance is often neglected by young people because “other things are more important” at the time.  However, opting for a life insurance plan that fits into your budget is one of the best financial decisions you can make in your early years.

Need help determining which policies fit into your financial plan bot now and for the future?  Give us a call, or come by our local Winter Haven office.  We are proud to serve our Polk County clients with top-quality, personalized service, and we can help you make sure that the insurance portion of your financial goals will be met throughout the years.

When it comes to financial planning, be smart and start young!