Every year, the approach of April 15th makes us think just a little more about our personal finances. But there’s never a bad time to make saving and planning as much a part of your regular routine as working out or calling your mom—and it’s never too soon to get started.
We get it. Digging into your money, especially early in your career when there isn’t much to dig into, can be discouraging. But whether you’re saving for a specific end-goal or just peace of mind, the sooner you get started, the better. A financial adviser can help you refine your short- and long-term goals, and help you understand how a proper budget and even incremental saving will help you reach them. We’ve previously written about how to find the right financial professional for you; here, we look at some reasons getting started sooner rather than later pays off.
Saving Doesn’t Necessarily Get Easier Over Time
When your first job out of college doesn’t pay much, regularly setting aside some of your paycheck can seem nearly impossible. But as your salary increases, so do your expenses. Whether it’s children, a mortgage, or just increased costs of living and responsibilities, for most of us, disposable income will always take diligent budgeting and planning to properly allocate. Don’t adopt the “someday” mentality. By developing a conservative budget and a commitment to saving early in your career, you’ll make it a habit.
Low-threshold apps like Personal Capital and Acorn and the myriad Robo Advisors out there might provide a transactional service, but they can’t replace a relationship with your own money manager. The financial planner-client relationship is, by necessity, intimate. You’ll tell them the ins and outs of your finances, lifestyle, and goals. And in turn, these planners—with their years of industry knowledge and expertise—can help you strategize things like debt repayment, budgeting, and savings. That kind of customization could help you reach your financial goals much faster than you could do it on your own.
The Sooner You Start Investing or Saving, the More Money You’ll Have
This may seem pretty obvious, but consider the math. If you start with $500, and add $500 each year for five years, you’ll have about $3,500 at a 5 percent average compound return. We’ve covered how much it can cost you to wait to save in the past, so getting started with an adviser right away can lead to larger gains down the road. While returns are never guaranteed, your adviser can work with you to identify investment options that might be right for your unique financial situation. Additionally, a planner can walk you through how much risk you should assume when investing. But generally speaking, the longer you intelligently invest, the higher the odds are of a positive return.
The same, of course, goes for saving. Younger professionals can often find themselves easily discouraged when it comes to saving money. For example, you plan to save $250 each month, but one month you have an unexpected $200 expense. Some people would talk themselves into forgetting their savings goal altogether, instead of saving the leftover $50. And how many of us would decide to pull half of the $200 expense from somewhere else in our budget and take the other half from our intended $250 savings, and still be able to put $150 in the bank? The point is that saving anything is better than nothing. In life, there will always be unexpected expenses, but a professional will help you handle them with grace and pragmatism.
You’ll Have a Better Overall Relationship With Money
The right adviser won’t just help you plan, budget, and save. They’ll also help you understand more about money in general, and how to make it work for you. Some people shy away from taking the first steps toward creating an intimate relationship with their finances because they’re scared of what they might find out. Or maybe they’re deterred by the foreign jargon or the befuddling rules and regulations around investing and banking. Whatever the reason for putting it off, remember that it’s your money. The sooner you understand how much you have and how it works, the sooner you can get your money working for you.