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Why Financial Planning Matters Early in Life

January 31, 2024

Why Financial Planning Matters Early in Life

 Whether you are new to the workforce, starting a family, buying a home, or maybe that 401(k) or IRA you have been putting money into finally has a substantial amount in it, why should you start thinking about it now? After all, you have plenty of time to think about it later, right?

 “Why is Financial Planning important to me now?”

 Time

 Life is full of unexpected events and expenses, and being prepared for them will reduce a lot of anxiety. After all, wealth is really about time, freedom, and choices. Investing time now may afford you choices later that other friends may not have. 

 

Time is your biggest friend when it comes to investing for many reasons:

  • Compound interest: Where your money invested earns more money over time. The longer your money is invested, the more time it has to compound, and the greater the potential for your investment to grow significantly.
    • For example: If you are 30 years old it would take around $670/month saved (never increasing for raises, etc.) for 30 years, assuming an 8% return, to have $1,000,000 by age 60. Under the same circumstances, it would take $1,700/month if you started saving 10 years later at age 40 to have $1,000,000 at age 60.
  • Risk Mitigation: Markets fluctuate up and down all the time. Historically, the impact of short-term market fluctuations average out over time (the compound annual growth rate of the S&P 500 over the past 95 years is around 8%), and markets recover and grow over the long term. Therefore, it is important to have a plan and stick to it.
  • Dividend Reinvestment: Although dividend reinvestment may not be the right choice for every investor, in general you are increasing the money you can get in retirement by owning more shares of a company. You also can take advantage of dollar-cost averaging, which averages out the costs of investing while reducing risk from market volatility.

 

Peace of Mind

 At Fiscal Harmony, we aim to consider your unique situation. Everyone’s lives are different, and so are their financial needs. Peace of mind is a powerful thing, and it’s one thing we hope to achieve with our proprietary S.C.O.R.E. process. We build your “score” based on hearing your Story, figuring out your Cash Flow, comparing Opportunities, looking for Real Return, and avoiding Easy Money Mistakes.

 

What is your S.C.O.R.E. in ’24?

David Day   Financial Professional 


There are risks involved with investing which may include market fluctuation and possible loss of principal value. Particular investments may not be suitable for certain situations. Carefully consider the risks and possible consequences involved prior to making an investment decision. Our firm does not provide legal or tax advice. Be sure to consult with your own legal and tax advisors before taking any action that may have tax implications.

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