Financial Advice for Young Professionals

March 24, 2023
Estimated Reading Time: 4 Minutes

It is essential for young professionals to develop good financial habits early in life in order to secure their financial future. Saving money may seem like a daunting task during the early stages of your career, but it’s important to prioritize budgeting, saving, and investing. By adopting a few simple habits, you can get a better grasp on managing your money and start making progress towards building a solid financial foundation for yourself.

The Associate Advisor Team at Chicago Partners has put together a list of financial tips for young adults:

1. Start with a Financial Plan

The first step in saving money is to outline your financial objectives alongside your income and expenses. This will help you identify the portion of your income that you can begin to allocate towards savings. Though the future may seem uncertain, it’s important to develop a personal finance roadmap to get an understanding of where you’re going and how you’ll get there.

2. Track Your Expenses

Make sure you always understand where your money is going. By tracking your expenses, you can ensure that you’re spending less than you earn. You can do this by using a budgeting app or spreadsheet that will help you stay on top of your spending and identify areas where you can cut back.

3. Set Savings Goals

Determine how much you want to save each month and set specific goals for what you want to achieve. This will give you a clear target to work towards and help you stay motivated to save.

4. Automate Your Savings

Set up automatic transfers from your checking account to your savings account each month. This way, you won’t have to think about saving and instead it will become a healthy habit.

5. Pay off High-Interest Debt

If you have high-interest debt, make it a priority to pay it off as soon as possible. The interest on credit card debt can be expensive and it will eat into your savings. Additionally, it will be helpful to have a good credit score if you need to take out a loan for a large purchase in the future.

6. Start Investing

One of the most important factors when it comes to investing is time. The longer you invest, the more time you have to benefit from the power of compound interest. It is a common myth that you need a lot of money to start investing. In reality, even if you start small, with a long time horizon your investments will have the potential to grow exponentially. Young professionals should take advantage of their position in life and start investing early. By building a diversified investment portfolio sooner rather than later, you can create a reliable source of passive income that can help you achieve your long-term financial goals.

7. Take Advantage of Employer Matching

If your employer offers a contribution matching to your 401(k), do everything in your power to contribute enough to get to the full match. This is essentially free money, so you want to take advantage of it as much as possible. If you’re not contributing enough to your retirement account to maximize the employer match, you’re leaving money on the table.

8. Build an Emergency Fund

Unexpected expenses can arise at any time, so it’s crucial to have an emergency fund. Set aside at least three to six months’ worth of living expenses in a separate account. This fund will help you avoid high-interest debt in case of an emergency.

9. Plan for Major Purchases

If you’re planning to make a significant purchase, such as a home or car, plan ahead. Determine how much you can afford and save up for a down payment.

10. Seek Professional Advice

If you’re unsure about how to manage your finances or invest your money, seek advice from a financial professional. They can provide guidance tailored to your individual needs and goals. Contact Chicago Partners to set up an introductory meeting with one of our advisors who can help you save for retirement.

Building a solid financial foundation as a young professional requires discipline, planning, and a willingness to learn. Though often an afterthought for young people, financial planning early can help set you up to achieve your financial goals and objectives and protect your wealth through retirement.

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