It’s back to school time. The neighborhoods near Boston’s many colleges and universities are filled with students and their families moving in for another school year. In my last post “The Empty Nest Might Not Be So Empty After All” I emphasized the importance of having a health care proxy for anyone over the age of 18.
Recently, the Boston Globe featured an article on important, related topic – financial planning for young adults - including college-age kids.
Even though people usually think of financial planning as being for older adults who already have built up considerable savings, there are some great reasons why a visit with a financial planner is important for young adults. They might not have much yet in a savings account there are some important ways that getting financial advice will help them get a good start.
The first benefit is learning how to budget. This may be the most important lesson of all for a young adult who will be living on their own and paying their own bills for the first time. For many college students, it will be tempting to use the new credit cards they’ve received in the mail, without really tracking their expenses. One of the basic steps in developing money skills is to know where your money is going.
Another important skill is learning how to plan for and save for special purchases like buying a car and traveling. Learning about interest rates and how they work, whether they are for credit cards, auto loans, student loan or other borrowing will be very helpful.
Getting help in starting contributions to an IRA or other retirement plan will go a long way to getting off to a good start. In fact, contributing in your twenties to Roth IRA is one of the smartest decisions you can make Thanks to compound interest and tax-deferred growth, contributing as little as $2, 000 a year for three years, to a Roth IRA could grow to $642,000 in 50 years!
You can read the article here: Young Adults Get A Boost With Planning