5 financial planning tips from the professionals
We realise retirement is almost literally a lifetime away, but if you’re earning any money at all, it’s never too early to take some expert advice and start sensible saving for the future
- If you need some advice on managing your money, and ensuring a financially secure future, a financial planner can offer objective money advice.
- But you don’t have to wait until you’re in a full-time job to get good at managing your wealth – or lack thereof. Developing good habits in your late teens and early 20s will give you the skills to protect your assets later in life.
Here are five top tips from certified financial planners on how to make the most of your money, and get on the right track track for life.
1. Work hard and put most of your money away
Renee Kwok, certified financial planner and the CEO of TFC Financial, a US$1 billion financial planning and asset management firm based in Boston in the US, tells her young daughter to “work hard and save most of your money”.
But, Kwok added, where you save that cash is almost as important as how much you put away. “You can’t collect interest or grow your stacks of cash if they are sitting in an envelope in your desk drawer.”
A high-yield savings account or money-market account is often the best place to keep savings so it grows, but remains easily accessible. While you won’t wreck your financial life by not storing savings in a high-interest account, your money will almost certainly lose value thanks to inflation. Online savings accounts, as opposed to big retail banks, usually offer the best rates, which can be up to 200 times more than a checking account.
“Even in today's low interest rate environment,” Kwok said, earning some interest is far better than none. And if you have an established emergency fund, consider investing in index funds to grow your money even more, she said.
2. Tackle your ‘bad debt’ first
Debt isn’t a death sentence, but it can certainly hold you back. To help people balance their debt and savings goals, personal-finance company SoFi created a three-step method, Lauren Anastasio, a certified financial planner at SoFi, said.
“We call this the ‘debt fireball method’, and that’s where we attack the highest interest rate debt first, the bad debt,” Anastasio said. That means putting as much as you can toward credit card debt and high-interest rate personal loans, while still paying the minimum on all other balances.
