There is a popular misconception that only people with significant assets can benefit from the services of a financial advisor. This could not be further from the truth. I work with many clients who are just starting out who don't have much in the way of assets, but are earning great money, and need help determining how much they should be saving, paying for a home, and determining the best strategies for repayment of their debts. I recently saved a client a significant amount of money by devising a strategy for repaying her student loans, credit cards and auto loan. She was able to use this savings to accumulate enough for a down payment on a home while paying her debt off in a year and a half as opposed to ten years. I usually recommend that my clients repay their debt with the highest interest first, and many times they are shocked at the amount of interest they can save and how quickly their debt can be repaid.
When I first meet with my clients, I calculate their projected take home pay after deductions and taxes, and we then develop targets for spending on basic living expenses, savings and for spending on discretionary items. When clients are earning a significant income, they are often surprised to see how much they have available to spend. They are happy to see that they can save and also sometimes have more than they need for basic living expenses, and this can be used as additional savings to help them achieve their financial goals. Many of these clients who earn high incomes but are just starting out really need a short term strategy to get them pointed in the right direction. They need specific advice on saving for an emergency fund, a down payment, repaying their debt and also saving for their long term goals. Once they have developed a short term plan, they can then work towards starting to invest for their future. They need advice on the proper allocation of assets in their retirement accounts at work, and also for establishing a taxable brokerage account.
A financial advisor can help you to navigate all of the changes you will experience through your life. It is good to get started early so that you have a plan in place to help you to achieve your financial goals.
About the Author
Patti Hughes is a Chicago Fee-Only Financial Planner. Lake Life Wealth Advisory Group provides comprehensive and objective financial planning, retirement planning, and investment management to help clients organize, grow and protect their assets through life’s transitions. She is a fiduciary, and does not sell products or earn commissions, so she truly acts in the best interests of her client