A person who just joined the workforce might be concerned that with his low starting pay, he is not earning enough to begin constructing concrete plans for his finances; a businessman might want to focus on running the business and rolling back any positive cash flow back into growing the business, making all other matters are secondary; a couple who are about to get married or have recently tied the knot might find that they want to only look at doing proper financial planning later on in their lives and sometimes even take up loans to spend exorbitant amounts for dream weddings and lifestyles.
The common question that plagues many is often this: When exactly is the right time to start properly planning for one’s finances?
The fact is that one can never have enough when it comes to money, and if one were to look for a reason to procrastinate proper planning for finances there are abundant excuses that one could use. At whichever juncture in your life, you can always find a reason to push back the need to start planning, and many a times you will not feel the impact of your decisions, at least until either a catastrophe hits you or you realize that you are overburdened with financial commitments so much so that retirement seems like all but a distant dream.
A fresh graduate might have less monies to utilize for planning, but life insurance costs are generally much lower for such a person as opposed to someone in their 50s who may be drawing a significantly higher pay. Similarly for the purpose of investments, an older individual would also likely has less years to invest before their ideal retirement age, as opposed to people in their 20s or 30s who have at least a few decades to prepare their retirement fund.
There is never a default “best age” to start planning at, and planning does not necessarily mean that there is a need to purchase any plans or start investing immediately, which is a common misconception of the general public. True comprehensive planning entails properly analyzing one’s financial situation in terms of cash flow and net worth, from which a finance professional would be able to diagnose what might be your certain pitfalls that you may face either now or in the near future. You also have to consider your individual situation and circumstances, as different scenarios might call for different methods and strategies to tackle any potential problems. The crucial point is to identify all areas of your financial situation that need to be addressed, and also put in place an action plan for all your solutions to these issues even if you find it difficult to implement certain plans or strategies due to limitations of your current financial situation.
Having a proper plan establishes a healthier spending habit. In most cases, the ability to retire relies less on how much an individual earns, but more on how much of that income does the individual spend, and also the kind of retirement you wish to be able to achieve. Regardless of whether you are earning $5,000 a month or $100,000 a month, if you spend away 100% of your income, you will still find it difficult to visualize any form of retirement in the near future. A professional adviser would be able to help you segregate your committed or fixed expenses (such as utilities, loan repayments etc) and your variable expenses (such as personal expenditure or holidays). When people find that they are spending away most or all of their income every month, it is often due to a lack of financial discipline resulting in high variable expenses. Budgeting aside a certain amount of your income for savings, investments and insurance is important, and the amount to budget aside for each category for each individual will differ from person to person. Via proper budgeting, many even feel more liberated since you will know that you can comfortably spend the amount that you set aside for your personal expenditure each month, without having to worry about it resulting in any repercussions for the rest of your financial plans.
Just as doctors diagnose and treat your health problems, and lawyers advise and aid you in tackling legal issues that you might face or need to address, a professional financial adviser can make a huge difference in how you grow or conserve your hard earned monies, and I would personally encourage you to take your time to find one you can trust with your financial situation in its entirety and whom advice you know is sound and rational; do not be drawn in to purchase financial products due to free gifts or other such incentives, since as tempting as these may be, they do not serve the main purpose of securing your financial situation, and in some cases might even hurt your overall financial situation if the plans or products are not suitable for you.It may take time and effort, as well as a reliable and professional adviser to be able to construct a concrete and well thought out financial portfolio, but often you will find that it is well worth the effort, and you can leverage on your trusted adviser should you have any need for proper financial advice in whichever relevant areas in finance in the future.
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