Looking for a Financial Advisor for Young Adults
If you’ve recently graduated college or are just beginning your career, a financial advisor specializing in serving young adults can help you make smarter money moves.
While some people may believe financial planning for young adults is fairly straightforward, the reality is that your 20s and 30s can be a pivotal time when financial decisions can have significant consequences decades later. For example, a thoughtful plan to save for a house, strategies to pay off student loans, and learning how to make the most of your employee benefits like a 401(k) plan and Health Savings Account can increase your chances of being able to retire comfortably at an earlier age.
A financial advisor specializing in working with young adults understands how to answer their clients’ questions as they build their lives and establish strategies to help them achieve their financial goals. And most of these advisors offer very affordable pricing for young adults just starting out in their careers, entering new relationships, and growing families.
You’ll likely find dozens of nearby financial advisors well-suited to help you reach your money goals with a personalized plan. But it may be more difficult to find a local financial advisor who specializes in serving young adults.
Fortunately, many financial advisors offer virtual services so you can meet online no matter where you (or they) live. This means you can choose to hire a specialist financial advisor who lives hundreds of miles away if you decide their knowledge and experience working with young adults is a better fit to help with your unique financial planning needs.
In this guide, we’ll share useful financial tips about managing your money as a young adult, along with guidance to help you get started in your search for a financial advisor. We’ll also introduce you to financial advisors featured on Wealthtender specializing in working with young adults and who you may want to add to your shortlist.
Financial Tips for Young Adults
You are only young once, but life as a young adult is not always fun and games. Young workers, in particular, face a number of challenges, from finding their first apartment to trying to make the rent each month. If you are just getting started in life, you might think you do not need any financial planning tips, but now is actually the best time to get started.
The sooner you start saving, the easier it will be to reach your goals later in life. The power of compounding means that every dollar you save now can pay huge dividends for the rest of your life. You do not have to live like a pauper or give up the fun things you like to do. Saving even a small amount now is enough to get you started. Here are four tips to get you started.
1. Put Money in your 401(k) from Day One
Participating in your 401(k) at work is perhaps the most important thing you can do to secure your financial future. The great thing about the 401(k) is the money comes out of your paycheck before you see it — making saving easy and relatively painless.
You can start with as little as 1% of your pay, so go ahead and sign up even if you think you cannot afford it. As time goes by, you can ramp up the savings and watch your money grow. You’ll also benefit from “free money”, assuming your employer offers a 401(k) match.
2. Make a Budget
Now is the time to make a budget and find out where your money is going. It might not be a fun thing to do, but creating a budget is an important part of being a financially responsible adult.
Your budget does not have to be elaborate to be effective. Something as simple as a sheet of paper or a spreadsheet listing income and expenses is enough to get you started. If you need help, there are plenty of budget tools and resources available online.
3. Take Care of Yourself
You might not think that staying healthy could have an impact on your finances, but living a healthy lifestyle can save you money in many different ways. From lower out-of-pocket costs at the doctor to better earning power, your health impacts your wealth more than you might think.
Many young people work hourly jobs, and missing a shift could reduce the size of their paychecks. Staying healthy can maximize your earning power. In addition to the increased earning power, staying healthy could reduce your out-of-pocket healthcare costs. Many young workers choose the lowest cost health insurance – and that is often a high-deductible policy. Eating healthy and following preventative care recommendations can keep you out of the doctor’s office and keep more money in your pocket.
4. Limit Your Use of Credit Cards
Credit cards can be valuable tools of convenience, but they can also be dangerous debt traps. Keep a credit card for emergencies, but keep it at the back of your wallet and pay cash for everyday purchases.
As you learn to budget your money more effectively and live within your means, you can start using plastic for ordinary purchases to take advantage of points, air miles, and other rewards. If you feel your willpower slipping, however, it is time to put that credit card away and make the switch back to cash.
While young adults face a number of unique challenges when starting their financial lives, none of those obstacles are insurmountable. With some willpower and some common sense, you can take control of your finances and start saving today for a better life tomorrow.
How Young Adults Can Build Their Credit Profiles
A good credit score is important for everyone, but it can be especially critical for young people just starting out. Without savings to fall back on, young workers may be more likely to borrow money, and every minus point on their credit score will literally cost them more money.
Credit scores for young people can sometimes seem like a catch-22. Lenders may be reluctant to loan money to young people who do not have a credit history while building up a credit history cannot happen without those sorts of loans. If you want to help the young people in your life build up their credit profiles and improve their credit scores, here are some creative ways to make that happen.
1. Sign Up for a Secured Credit Card
Traditional credit cards can be risky for young people who have not developed fiscal discipline, but secured credit cards are different. A secured credit card is tied to a bank account, with the limit equal to the amount on deposit. That makes the secured credit card an especially good vehicle for young people who need to build their credit scores quickly.
You can think of a secured credit card as a set of financial training wheels. The young person who gets the card can learn about the ins and outs of spending, all while growing their credit score through a series of on-time payments. Armed with the knowledge they gain, young adults can move on to a traditional card and continue their journey to a stellar credit score.
2. Seek Out a Credit Builder Loan
While lenders can be reluctant to loan money to young people who lack a credit history, that reluctance is far from universal. In fact, some banks offer special credit builder loans for young people and others who do not yet have an extensive credit history.
If you have an existing banking relationship, you can contact the institution and ask about these types of loans. Taking out a small credit builder loan and paying it off quickly can be a fast route to a good credit history and positive credit score.
3. Become an Authorized User on a Parent’s Credit Card
Lastly, adult children can become authorized users of their parent’s credit cards. By completing transactions and making payments on time, young adults can begin to build up a separate credit profile and, hopefully, a stellar credit score.
Building credit can be a slow process, and that is doubly true for young adults who are starting from zero. Most young adults will be entering the world without an extensive credit history, and that can make qualifying for loans and securing credit cards that much more difficult. The tips listed above can help the young adult in your life build credit fast — even if that young adult is you.