Why you should see a financial advisor in your twenties
Financial planning is a crucial aspect of life, regardless of age or economic status. You need to make informed decisions about your finances to effectively pursue your life ambitions. For many, this process might seem quite difficult to understand. This is where the role of financial advisors can become significant. They offer advice and guidance on various financial matters, including budgeting, investments, retirement planning, tax planning and insurance. Financial advisors provide a comprehensive perspective of your financial situation and help you make informed decisions to achieve your financial goals.
While not often considered by young adults, the importance of financial planning for twenty-somethings cannot be overstated. This stage usually involves a series of financial hurdles such as dealing with student loan debt, getting a first job, or planning significant life milestones such as buying a home or starting a family. A financial advisor can help you overcome these challenges, establishing a solid financial foundation for your life.
What a financial advisor can help you with
It may be difficult to justify the cost of a financial advisor in your twenties, especially if you think you don’t have enough assets built up yet. However, if you have a decent amount of money (~$50,000+), it might be worth it. Here are five specific things a financial advisor can help you with.
1. Creating a long-term financial plan
One mistake many people make in their twenties is not having a long-term financial plan and not knowing what they are saving or investing in. It may take decades to execute a financial plan before you have enough money to retire. More and more young people want to retire early, but it is almost impossible to do so if you don’t plan well in advance.
Talk to a financial advisor to come up with a plan to achieve your goals.
2. Help you invest
You may know that you need to start investing, especially to accumulate enough money to save for the retirement you want. An expert can help you meet your goals, your risk appetite and ensure your portfolio is adequately diversified. Additionally, there are likely many resources that could help you achieve your goals that you may not be familiar with. Advisors can help you understand each and help you invest in the most appropriate ones.
3. Start retirement savings
The earlier you start saving for retirement, the more options you will have for retiring early and the more money you will have to enjoy your golden years. The benefit of compound interest is that your account can continuously grow over time. The more time you have, the more it can potentially grow. Starting retirement savings in your twenties can make a huge difference in your future.
There are many things to consider for retirement. A financial advisor can help you make small initial decisions that add up in a big way.
4. Help you create strong financial habits
One of the biggest problems people face in achieving their long-term financial goals is creating the right financial habits when they are young. It’s okay to need help finding the right balance of financial habits that will help you achieve the financial future you want. Strong habits can make all the difference in reaching the milestones you need to reach your long-term goals. You can have more money to pay off debts, buy a home, or even retire when you want.
5. Help you eliminate debt
Many people in their twenties are struggling with significant debt, especially student loans and credit card loans. The Federal Reserve reports that the average American has more than $32,000 in student debt and $7,279 in credit card debt. These figures often lead to financial strain, and the habits that create these debts are created in your twenties.
While financial advisors aren’t the only solution to eliminating debt, their expertise can make some strategies more accessible. They can formulate strategies for managing this debt, assist in creating a budget, understand interest rates, and prioritize payments.
Financial advisors can advise clients on the fastest and most effective ways to eliminate debt.
Bottom line
Financial planning is not a one-size-fits-all path. Your financial needs and resources should be at the forefront when evaluating whether a financial advisor is right for you. Identify your financial goals and consider what kind of help you need. Explore different types of consultants and their fees to make an informed decision. Finding the right advisor for you will depend on your financial situation, your financial goals and the value you place on advice.
Financial planning tips
- It’s important to create a financial plan as soon as possible. The best way to do this when you are inexperienced is to find a financial advisor who can help you. They can provide you with expertise and supervision to help you achieve your short- and long-term financial goals. Finding a financial advisor doesn’t have to be difficult. SmartAsset’s free tool matches you with up to three vetted financial advisors serving your area, and you can have a free introductory call with your advisors to decide which one you think is right for you. If you’re ready to find an advisor who can help you reach your financial goals, start now.
- You can also get insight into what your portfolio might look like with certain investments by using SmartAsset’s free investment calculator.
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