Financial Planning for Young Adults

Posted on Posted in Unrelated to Music

In my observations, people spend their mid-20’s approaching 30 two ways:

1.) Acting like they are still in high school or college.

2.) Developing a strong financial foundation for the rest of their adult life.

It’s refreshing to talk to friends that have chosen to focus on the latter. Not only do I not have to worry about them, but we can also share ideas for long-term planning with finances.

“What methods are you using to fund your retirement?”

“What vehicles are you using for savings and investments?”

“What are your financial goals in five years?”

It definitely goes much further than tying to form excuses for receiving a 5th and final notice electricity bill and merely just…getting…by…paycheck…to…paycheck.

Unfortunately, I’ve run across people approaching 30 and up that have no sense of direction, especially as it relates to financial matters. Laziness. People in their 20’s have the perfect opportunity to set goals and develop a strong financial pyramid. The longer the wait, the harder it becomes to stay ahead of the curve.

By the time people reach their mid-to-late 20’s they should have already:

1.) Constructed a monthly budget. This is the hardest of them all. Be aggressive with it.

2.) Built up an emergency fund for three to six months.

3.) Set a timeline to pay down any debt (credit cards, student loans).

4.) Figured out a way to pay down any debt (high interest rates first, graduated repayment plans if needbe, etc.).

5.) Set up and researched relevant, affordable insurance policies without becoming insurance broke.

  • Health Insurance
  • Convertible Life Insurance, especially if they’re planning on marriage and a family. Premiums are much cheaper to young and healthy people, especially when using term.
  • Disability Insurance
  • Umbrella Liability?

With insurance you win by losing.

6.) Researched high-yield savings accounts.

7.) Looked into funding retirement accounts.

8.) Anticipated tax treatments.

By constructing a firm pyramid, people down the road can feel more comfort in aspects of financial adulthood. Finances are very personal and there isn’t a one-size-fits-all plan. My suggestion is to find a trustworthy financial advising firm that not only helps, but teaches people how to manage money. Also, use baby steps: don’t think all of this has to be done at once. Do what feels attainable, comfortable and most importantly, tailor planning to fit exact needs. Lastly, I cannot emphasize enough that financial planning has nothing to do with career path. People should do what they want to do. If someone is passionate enough about something, they will find a way to succeed. Furthermore there are ways to secure all these items, even for freelancers. It’s just a bit more difficult. However, anything is possible.

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About Nick Grinlinton

Nick Grinlinton has written 113 entries on this blog.

Nick Grinlinton is a guitarist, composer and educator based in Brooklyn, NY. He is a two-time ASCAP Young Jazz Composer Award finalist and has composed and played music for Jerry Seinfeld's web series "Comedians in Cars Getting Coffee". A speedy runner, Nick currently focuses on racing distances from the mile all the way to the marathon. As he continues to train daily, he is currently examining what effect music has towards running. To learn more and to contact Nick, visit his website.

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