Sunday, October 15, 2017

You Can’t Plan for Tomorrow by Waiting for Tomorrow

Mark Ganchiff, CFP®
Author position
Financial Planner

While wisdom doesn’t always come with age – there is at least one senior habit that the junior generation should consider absolutely relevant for today: comprehensive financial planning.

It may appear odd to today’s young people that the previous generation sometimes drives 25 miles per hour in a 45 mile-per-hour zone … or that they actually write paper checks at the grocery store. After all, such deliberate caution and conscious intention are so yesterday, a mere remnant of now-ancient history.

Yet – while wisdom doesn’t always come with age – there is at least one senior habit that the junior generation should consider absolutely relevant for today: comprehensive financial planning.

Time won’t always be on your side

According to Heather Osborn, Director of Wealth Planning and a Certified Financial Planner™ for Hilliard Lyons, people in their 20s and 30s too often neglect financial planning because they believe that time is on their side.

But a comfortable retirement without a plan that starts early in life is nearly impossible, Osborn says. “If you want to retire before age 65, an aggressive savings plan is really the only option. Early- and mid-career workers should be doing formal financial planning now so they’re not playing catch up in their mid-50s,” she adds.

You need advice, not just information

Online retirement and budgeting calculators can be useful for crunching numbers and running projections. But computer programs don’t allow for individual attitudes about saving and spending money. Most people need more than a computer application to find the financial strategy – and the required discipline – that works for them in the long run.

Beyond merely providing information, a professional financial planner can actually tailor recommendations for your unique financial situation. And for younger clients, the planning process typically includes a critical analysis of spending habits.

On a practical level, formal financial planning with a Certified Financial Planner™ can address real, immediate concerns that younger people often have. For example, are the rates of your existing student loans competitive? Are there ways to chip away at current debt that allow room for both current living expenses and a savings program?

Who are you trying to impress … and at what cost?

Spending and savings decisions should never be left to chance and whimsy. The choices made during early adulthood too easily become the habits of middle age. A five-star outlook might be fun during one’s early years, but a free-spending lifestyle can lead to an unsustainable level of consumption and an overdependence on debt.

An expensive house or car, for instance, might make an impression on others, and saving money requires self-discipline. And that doesn’t sound like fun. Because it provides accountability, having your own financial “coach” can help you overcome the temptation to spend money foolishly.

One additional – and very important – benefit of financial planning for young people is stress reduction. Studies show that young people are among the most likely to worry about money matters. Much of resulting stress is unnecessary and is best dealt with through advance planning.

“Turn and face the strange ch-ch-ch-changes.” – David Bowie

Getting married and having children are major life events that warrant a complete financial review. Financial planners can help couples find common ground on money matters. A frank and open discussion about finances early in a marriage can alleviate many of the friction points that arise between couples who don’t see eye to eye on spending and savings decisions.

Later, many young couples want to know if a one-income household is workable for them. Addressing such complex family issues requires a financial planner who is knowledgeable about matters including insurance, estate planning, and investments. And don’t forget about the taxes

A basic understanding of personal tax rules becomes essential as young people start to earn more money and begin accumulating wealth. While the internet is full of tax tips, it is risky to apply general tax information to your own personal situation without the assistance of an advisor.

Beyond its impersonal nature, the internet is full of faulty or questionable advice, particularly when it comes to taxes. A financial planner can help distill tax issues down to the bare essentials, saving you both time and money.

So what are YOU waiting for?

It’s been said that the best way to get anything done is to begin, and that is certainly true when the goal is to get your financial house in order. Too often, “later” becomes “never,” and “tomorrow” never comes. A Hilliard Lyons Wealth Advisor and Certified Financial Planner™ can help you with those first important steps.

Wisdom often does comes with age. Yet, if you fail to plan adequately, age could show up all by itself ...