By Reagan Mitchell, CFP® and Managing Director of WealthyMe
Many people, irrespective of age, struggle with being completely disciplined in following a financial plan or strategy. The most effective way is to have a certified financial planner to help keep tabs on your financial goals as well as reviewing your financial plan against those goals at least once a year. Whether it be risk mitigation, debt-reduction, savings or wealth creation.
The unique financial situation of young professionals
Many young professionals especially Gen Z and Millennials are in a unique life phase with a unique set of financial circumstances. This group of people are at the progressive phase of their careers, earning above average incomes, able to access information at their fingertips, don’t have children and likely still living with their parents. Given this dynamic, the young professionals are having the time of their lives, enjoying the fact that they have surplus income and spending money on things that matter to them. Their financial planning goals range from wanting to build a good credit score, saving to purchase that first vehicle and sometimes it is planning a group overseas trip, which is great. However, they need to guard against reckless spending which could lead to unnecessary debt accumulation to satisfy immediate gratification needs.
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While you’re unmarried, don’t have dependents and possibly still living with parents, be sure to put a financial plan in place, because chances are that without it, you’re going to spend recklessly. Start simply by budgeting to track your expenses and then doing monthly recons. This process can be automated by using personal finance apps like 22Seven or even just an excel spreadsheet.
Secondly, and this is a huge determining factor on how quickly and how well financial goals are reached, is choosing a certified financial planning partner who will assist in creating a financial roadmap.
These are the financial goals we suggest young professionals pay particular attention to and also how to prioritise them to make the most of what they’re earning.
Be ambitious in your goal-setting, but also remember to be realistic by making provision for disposable cash to spend on socialising. You’re young, after all. Prudence doesn’t have to come at the expense of enjoying the fruits of your labour from time to time.
In conclusion, it would be remiss not to mention that young professionals should really start their journey towards setting up their finances for long-term success by improving their financial literacy. It’s very easy these days with all the information available online, for example WealthyMe clients in partnership with 1Life have access to a rich content bank through Boston College.
When you’re better informed, you naturally make better decisions.