Whether you're still living at home, in school, or starting your career, your late teens and twenties present a prime opportunity to think about your financial future. Though you may not hit your peak earning years until your 40s or 50s, learning positive financial habits early might help support you when you need it later.1 Below, we'll discuss a few of the helpful financial planning tips for young adults.
Begin to Budget
The term "budget"—like the term "diet"—may prompt thoughts of deprivation. But a budget is a spending plan, allowing you to see exactly where your money is going each month and may make it easier to spot ways to save. By tracking your income and expenses, you'll be better able to manage your financial plans. And as your income increases and you get a better handle on your recurring expenses, it will become more comfortable to focus on what's important to you.
Save for Retirement
The sooner you begin saving for retirement, the better. Even if you can't afford to set aside much now, getting into the habit of saving for retirement may serve you well in the future. And if you put away something now, you may be able to lower contributions later if your financial situation changes.
Insure Your Assets
A car crash, house fire, legal claim, or another disaster could potentially wipe out all your assets if you're not adequately insured. And for many young people, your future earning potential is your greatest asset, so it's important to preserve it.
Generally, a suitable way to guard yourself against some financial losses, disability, or even your untimely death is by purchasing adequate health, life, and disability insurance. For those who own or rent, homeowners' and renters' insurance may cover the replacement cost of your possessions and physical damage to your home, while auto insurance may help if you're involved in an accident. Having each of these insurance policies may help preserve your assets if you're named as a defendant in a lawsuit.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.
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