- November 19, 2019
6 Advantages of Starting a Financial Plan at a Young Age
Everyone knows the importance of having a financial strategy. Overall, a strategy keeps you in check from making costly financial mistakes. For example, if you’re an impulse buyer, you can structure a financial strategy around those issues so that you don’t waste money. As we can imagine, it serves a variety of other purposes such as helping you budget and save.
However, there is one major drawback to creating a financial plan that doesn’t get as much attention. The drawback to it is that most people don’t create one until they feel they are financially stable enough. In other words, they wait until they have enough money saved up to cover any mistakes. The reality of creating a financial plan is that it should be done at a young age.
Even if you feel you don’t have adequate funds to start one, what’s interesting about creating a plan is that it doesn’t necessarily have to have a revenue source. Plans can also be created by learning how to set goals, going over savings plans, and other helpful financial strategies. Above everything else, what having a financial plan at an early age will do for you is give you the freedom to create a business. In the long run, creating one will lead you to have the financial independence that everyone wants. Also, it’s important to highlight how unwise it is to wait until later in life to figure out a financial strategy. By your late teens, you should already be thinking about what financial direction you want to go. With this in mind, let’s go over six more advantages of starting a financial plan at a young age.
#1: It Allows You to Choose a Career Path
Perhaps the most attractive advantage of starting a financial plan early is that it allows you to choose a career path. This means not having to stress over what jobs fit you best or where you can make the most money. For example, if you wanted to be in the influencer marketing field, a financial plan will give you the freedom to choose it without any financial drawbacks.
#2: It Increases Savings for Living a Lean Lifestyle
Quite obviously, the sooner you can create a financial plan, the sooner you can start saving money. As a result, this also means that it will sooner lead you to live a lean lifestyle. A lean lifestyle is a lifestyle that encourages you to think about every penny you spend and what it’s going towards.
#3: It Allows You to Build Wealth Fast
If building wealth is your overall financial plan, starting a financial plan at an early age will speed up the time it takes for you to reach that goal. This was the plan that has helped a number of the wealthiest people in the world today. However, just don’t be too financially strict on yourself. It’s not worth eliminating the benefits that money provides for building wealth fast.
#4: It Establishes a Good Financial Credit History
Credit can be looked at as your financial standings. It shows how financially responsible you are throughout a given time. The benefits of good credit are that it makes it easier to purchase things like a car or house. However, credit takes time to build. For this reason, having a financial plan at an early age will benefit you in your later years when buying a house or car becomes important to you.
#5: It Allows You to Make “Cheap” Financial Mistakes
Another significant advantage of starting a financial plan at a young age is that it allows you to make “cheap mistakes.” In other words, it gives you the freedom to test financial strategies with minimal losses to your money. You can’t do this once your revenue starts to increase as making financial mistakes will also increase your losses.
#6: It Allows You to Create a Strong Emergency Fund
Perhaps the most important advantage of starting a financial plan early is that it allows you to create a strong emergency fund. An emergency fund serves the purposes of bailing you out in cases of unexpected financial issues. The reality of not having one is that it can immediately derail any progress you have made with your financial plan over the years.