As a young professional, how can I prepare for a solid financial future?

three young professionals looking at a white laptop

If you’re a young professional wanting to start off on the right foot financially, way to go!  The fact that you’re assessing your money situation is a huge step towards success, and there are a few other steps you can take right now!

1. Set Goals:  First ask yourself, what do you want to accomplish financially in 1-5 years?  In your career?  In life?  If you set goals for the future, you are more likely to better manage your day-to-day spending in order to meet those goals.  You could include short or long term goals, such as…

  • Paying off debt
  • Buying a house
  • Retiring comfortably (Who doesn’t want that?!)

Keep in mind that members have access to online calculators that help them figure out how long it will take to pay off debt, what kind of house they can afford, how much they’ll need to fund their retirement, and more.

2. Plan for Goals:  Once you set goals, figure out how you’re going to get there.  If you say you want to retire with a million dollars, but don’t figure out how you’ll actually make it happen, you’ll probably get to retirement and be very dissatisfied with your bank account.  You want to create an action plan with realistic steps.  Here are some examples using the goals listed earlier:

  • If you want to pay off debt, research different debt management plans (e.g. debt stacking, credit counseling, or bankruptcy) to find the best plan for your situation.
  • If you want to buy a house, look at possible houses to get an idea of how much you will need to pay each month, and start setting aside money for a down payment.
  • If you want to plan for retirement, figure out what you want to do during retirement and how much it might cost.

3. Create a Spending Plan:  Take a look at your income, then figure out your expenses.  Meeting financial goals will largely depend upon how much money you can contribute to those goals.

  • Include retirement contributions in your spending plan because the sooner you start saving, the more you will have available in retirement.  You want to make sure you’re building your own retirement savings, especially since Social Security is not as reliable anymore.
  • Also include general savings because emergencies and unexpected expenses will arise.  Having savings set aside will give you a better chance of overcoming financial challenges without compromising your goals.

Want a real life example of putting those steps into practice?  Say you’re 30 years old and have a good job.  You want to make sure that your financial future is secure, so you consider the steps above and proceed…

1. Set a Goal:  You want to pay off your credit card debt of $5,000 by this time next year, so you can start putting money towards retirement savings instead.

2. Plan for the Goal:  Figure out how much exactly you will have to save each month in order to meet your goal.  If your credit card debt is $5,000 with an interest rate of 10.99%, you will need to pay $450 a month in order to pay off the debt within a year.

3. Create a Spending Plan:  Whether or not you know you can pay $450 a month, take a look at your money and track how much is coming in and how much is going out.  This will help you know just how much you can actually put towards your debt.  Why?  Because it can show you how much you have left over after you meet necessary expenses (i.e. rent, car, food, insurance, et cetera), and it can show you where you might be able to get some more cash to put towards that debt – which will help you pay it off sooner!  For example, you may see that you spend a whole lot of money eating out each week, so instead, you plan to make more meals at home and put the extra money towards the $5,000.

Taking action now will give you more incentive to keep your money habits in check.  Too many people just spend and spend, and don’t think about their financial future until it looks pretty dismal.  Following the steps above will help you stay on top of your finances and go into the future with confidence.

Want accountability and trustworthy guidance so you can further prepare for a strong financial future?  Talk to your Money Coach.  You can work with Money Coaches who are debt and credit specialists, budget specialists, mortgage and real estate specialists, retirement specialists, and even tax specialists.  You can access a whole team of coaches who have the experience and skills to help you.  Call 888-724-2326 to talk to your Money Coach.