Financial Planning for Young Professionals

Your 20s are often seen as a true coming of age when financial responsibility opens up the possibility of turning your dreams into reality. You’re settling into life after university, paying off debts, and starting to really define who you are as a person. But with bills, rent, keeping up social appearances, and other pressures, financial planning is often pushed to the side.

Instead, you may need to take a different approach to your financial goals than previous generations. But what can you do without potentially hurting your future?

Just Start

Excess cash that’s sitting around is begging to be spent on impulse purchases. Instead, investments, even small ones, have the potential to grow over time. Assess where you can minimize expenses to free up investment money that may benefit you in the long run. Set a goal based on your income and goals and go from there.

Long-Term vs. Short-Term

Being able to start saving for retirement in your 20s can be beneficial, but it doesn’t have to be the be-all-end-all. You may also want to set money aside for your shorter-term goals, like paying off student loans, saving for a down payment, starting a family, or traveling. Once you’ve identified your goals, you can build a plan to save for the long-term while still giving yourself the freedom to enjoy life in the moment.

And as for retirement planning, see if your company has a sponsored 401(k) program or another retirement plan, and try to contribute an amount that will allow you to take advantage of any potential employer match.

Consider Diversifying Your Portfolio

It’s generally believed that attaching yourself to individual stocks opens you up for risk. Spreading your investments across numerous stocks may lessen the impact market volatility can have on your early investments.

Keep in mind that diversification does not ensure profits or protect against losses in declining markets.

Continue to Educate Yourself

The world of investing can be intimidating. But by educating yourself, both on your own and by consulting with a financial professional, you can build your understanding of investment jargon and keep yourself informed.

This material has been prepared by a third party that is unaffiliated with Townsend Asset Management Corp. and  is provided for informational purposes only. Townsend considers this third-party source and information to be reliable, but its accuracy and completeness cannot be guaranteed.  It may not represent the views of Townsend or its affiliates. It should not be considered a recommendation to purchase or sell any particular security. Past performance should not be relied on as an indicator of future results. All investing assumes a certain degree of risk, including loss of principal. Townsend has obtained permission to distribute this material. Townsend Asset Management Corp. is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about the firm can be found in its Form    ADV Part 2, which is available upon request. TAM-22-54