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What Issues Should I Consider When Starting Out Financially?

Updated: Jun 6, 2023

While parenting is not a core focus area in financial advisory services, we are uniquely situated to provide valuable support to our clients who are teaching their children to become financially responsible.

Financial literacy is fundamental to financial independence and prudence. However, financial topics and skills are often omitted from a traditional school curriculum, leaving the teaching responsibility to parents. In addition to leading by example, our clients may wish to engage their children in structured conversations regarding financial responsibility. To help guide these discussions, we have created this checklist to address many of the planning issues that young people face when first starting out financially. It covers basic financial topics, including:

  • Goal setting

  • Cash flow management

  • Saving strategies

  • Credit and debt management

  • Risk management

Welcome to Gateway Financial, where we provide valuable support to clients who are teaching their children to become financially responsible. Financial literacy is essential for achieving financial independence and prudence, yet it is often overlooked in traditional education. In this blog post, we have created a comprehensive checklist to address key financial planning issues that young people face when starting out. By following these guidelines, you can establish a solid foundation for your financial future.

Understanding Personal Finance Basics:

  1. Reviewing a Balance Sheet: Learn to differentiate between assets, liabilities, and net worth. Understand your financial position and track your progress over time.

  2. Cash Flow Management: Analyze your income and expenses to ensure they align. Create a budget that reflects your financial goals.

  3. Goal Setting: Utilize SMART strategies (Specific, Measurable, Attainable, Relevant, and Time-based) to set clear objectives. Prioritize and plan for achieving them.

  4. Funding Strategies: Compare different funding options to meet your goals. Consider factors such as time horizon and affordability.

  5. Cash Flow Issues: Manage your income and expenses effectively. Understand your pay stub and align your spending with your income.

Building a Strong Financial Foundation:

  1. Distinguishing Wants and Needs: Understand the difference between essential expenses and discretionary spending.

  2. Emergency Fund: Establish an emergency fund with three to six months' worth of expenses to handle unexpected financial challenges.

  3. Saving for College and Major Purchases: Plan and save for significant expenses like education, a car, a home, or a wedding.

  4. Saving for Retirement: Contribute to retirement accounts, such as employer-sponsored plans and IRAs, taking advantage of any employer match.

  5. Payment Methods: Understand different payment options and choose the most appropriate method for each situation.

  6. Charitable Goals: Consider supporting causes that are important to you by integrating charitable giving into your financial plan.

Managing Assets and Debt:

  1. Opening a Bank Account: Compare different account options and understand the terms and conditions. Consider co-signing with a parent if necessary.

  2. Introduction to Investing: Learn the basics of investing and explore different investment options suited to your goals.

  3. Credit Cards: Understand how credit cards work, including interest rates and repayment strategies. Use credit responsibly and establish a good credit score.

  4. Borrowing Funds: If considering borrowing for major purchases, compare lenders, review terms, and understand the total obligations over the life of the loan.

Protecting Yourself and Your Assets:

  1. Insurance Coverage: Explore personal liability insurance, property and casualty insurance, and health insurance options that suit your needs.

  2. Emergency Contacts: Ensure you have appropriate emergency contacts on record for various situations.

  3. Estate Planning Basics: Consider creating essential documents like wills, trusts, powers of attorney, and living wills to protect your assets and ensure your wishes are honored.

  4. Identity Protection: Safeguard your personal information and consider freezing your credit to prevent identity theft.

  5. Digital Asset Contingency Plan: Develop a plan for your digital assets, including passwords and access instructions.

By working through this financial planning checklist, you can establish a solid foundation for your financial well-being. It covers essential topics such as budgeting, saving, investing, insurance, and protecting your assets. Remember that financial planning is an ongoing process, and it is crucial to reassess your goals and adjust your strategies as needed. Seek guidance from a qualified financial advisor to navigate complex financial decisions effectively. Take charge of your financial future and set yourself up for long-term success.

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