It is never too early to start your financial planning. In fact, some of the saving and investment decisions that you make early on in your life can help set the tone for your future financial standing. That is why the sooner you start thinking about the importance of sound financial planning; the more likely you will be able to avoid major financial ups and downs later.
Get a head start
- Plan early for financial security
- Look into employer-offered programs
- Check with your bank for savings and investments options
- Make and keep your own plans
Early financial planning goes well beyond just saving, although putting money aside in itself can be good. What you really need to do is to begin on different long-term saving and investment schemes. Even if your monthly contributions are small, they will build up over the years.
Of course, early in your life and career, it can be difficult to imagine that down the road you may need funds for children’s education, retirement, and a big cushion of savings, which makes these savings marginal priorities compared to all the immediate temptations. What can you do to keep these far-fetched goals in perspective? Here are a few points to keep in mind.
Join employer programs
An easy way to help yourself save every month is to join your employer’s schemes, if any. From pensions to investments, look closely at what your company is offering and pick investments and savings that are not too risky. The positive aspect about these programmes is that deductions are taken directly from your pay cheque, and the money is often not easily accessible. Both factors help you simply forget about them, while they run and build you some good savings and returns.
In addition, many employers may offer matching benefits as an incentive for their employees. Although this may run only for the period of employment, it still can simply help your savings go a long way. Finally, employers who offer these benefits probably give you access to free financial advice and consulting as part of the deal, which can help you tremendously with getting a better understanding for now and the future.
Talk with your bank
Your bank representative will probably be excited to walk you through all sort of available saving and investment schemes. While you must try to take whatever you hear with a pinch of salt, you still be able to get familiar with available options. Try to get into programmes that don’t too much pressure on your monthly budget, but their low amount still can add up to significant savings.
In whatever programs you should you must verify that your savings are still accessible and that the program is transferable or can be terminated if you have to relocate to a different country within a short notice. Ask clearly for any penalties, charges and fees, or loss of interest. When it comes to long-term financial planning, you always must be sure that you will be able to get out of it if you need to without losing the return on your savings.
Do it yourself
Be conscious of the milestones in which financial security will make a big difference. Even if you don’t plan to get married and have children immediately, know that eventually you probably will do. What are your plans for tuition and higher education? Even more immediate, emergencies can happen at every juncture, your savings can help you weather these emergencies without having to resort to massive debt or simply go bankrupt. The more you plan now with putting money aside, ahead of an emergency, the more you’re going to have when something actually happens. With this in mind, select saving schemes that push you slightly out of comfort zone but are still doable.
Your understanding of the importance of these future needs can help you find ways to push some money aside. Again, even amount as small as Dh100 a month can build up overtime, and provide your with a financial cushion that can still help even when your goals evolve and change over time.
The writer, a former Gulf News Business Features Editor, is a Seattle-based editor.