When young adults enter the workforce and receive their first big paycheck, saving is often the last thing on their minds. Learning financial planning early on can have a lifetime of benefits and also help you better manage your funds when you are ready for retirement. Below, you’ll find a few of the advantages of starting while you are your 20s. 

3 Reasons to Start Financial Planning Early

1. Allow More Time for Your Money to Grow

You can begin withdrawing money from a traditional IRA or 401(k) when you’re 59 and a half, which is the age many people retire at. That means you have nearly 40 years for your money to grow if you start investing in your early 20s. Compounding, which means reinvesting as you earn, can turn small investments into significant profits in these nontaxable accounts. Even if you can only contribute $100 each month, start early, especially if your employer offers contribution matching.

2. Budget Time to Recover From Mistakes

Every investor is going to make mistakes. Starting young gives you time to learn and recover. This ranges from underestimating the amount of money you should save, choosing the wrong investment vehicles, skipping over life insurance, and making bad moves in the stock market. Adjust to the learning curve early so that you still have several decades to recover and significantly grow your retirement savings. Likewise, you’ll have more time to resolve debts.

3. Build a Riskier Portfolio 

As a rule of thumb, young investors can afford more risk and are advised to build a riskier portfolio. This means investing in volatile mutual funds, playing options, or purchasing high risk and reward stocks. Doing this closer to your retirement years limits your investment options and can lead to massive losses that negatively impact your retirement date.

No matter your age, Primerica can provide the financial planning and guidance you need. Based in Lithonia, GA, they advise clients on investments, debt resolution, and life insurance options. A qualified agent will guide you through your options and answer any questions along the way. Call (404) 374-1010 to schedule a consultation. You can learn more about their services on their website or by connecting on Facebook.