Let’s say you are a young adult – in your twenties or early thirties. You are a graduate, have a good income, a full-time job, you put some money aside each month and you have a good sense of finances… in other words you’re one of the financially aware… why would you need financial education? You manage quite well, don’t you?
Or is there room for improvement? A 2016 research performed by the Money Advice Service in the UK provides us with some interesting information about the financial literacy gap between those who are struggling and those who are aware of their financial goals earlier in life in the UK. As you may suspect, the financially aware are more financially resilient – based on credit, savings and insurance. Education and family support make an individual better equipped to make solid (financial) choices, but results show this group does in fact has some blind spots when it comes to controlling and managing their personal finances.
Focus on property
Generally speaking it’s not the question “if” a young adult who has laid out life planning goals will buy a house, but a question of “when”. Most of them have been raised with the habit of saving, they have good credit ratings or maybe even inherited some money, and have no problem putting down a deposit for a house. Owning a property gives them – quite justly – a sense of financial security, of independence. Besides it provides them with a number of other benefits, ones of emotional nature: a sense of achievement, a feeling of being grown up, status. Investing in a property and managing the responsibilities of home ownership can be a rewarding life choice for a young adult.
Owning a property and depending that this investment will provide them with “everything” they will require later on in life, might be misguided, if long term planning is not part of the equation.
Thinking you’ve got your basics covered when owning a house, is a huge misunderstanding. However, one a lot of people make. Cushioned young adults, after all, don’t always think they need to improve the way they deal with their finances. Their current financial comfort inhibits them from taking action and seeking financial consultation or a second opinion of their finances. People tend only to move when they are driven by discomfort or pain, which makes this group just as vulnerable despite their financial numeracy, good income and spending/ savings behavior.
Apart from this almost obsessive focus on property, this group of people also tends to neglect the effects of negative life events, such as divorce or separation, illness and job redundancies. Another problem is over-spending, having an extravagant lifestyle and failing to budget or plan for anything.Something quite common for people with a higher income.
It is easier than you might think to get sucked into a negative spiral of credit card overdrafts and loans, missing payments, having to take extra jobs and selling your house, just because you fail to plan, and fail to budget. Not even including the stress financial concerns will cause, and the strain it will put on your relationship – if not resulting in a divorce or separation.
In control of your finances
Yes, you too are vulnerable and fallible. But there is time, and you can still take the reins of your financial health. It’s not too late! The first thing to do is to acknowledge that there is room for improvement when it comes to your financial and lifestyle planning, and that you could do with some assistance. The second step, it to get moving, get into action!
“A dream becomes a goal when action is taken toward its achievement.”
- Protecting yourself against negative life events
- Portfolio approach to finances and investment diversification for the both the short/medium as well as the longer term
- Get educated about more sophisticated and varied financial products
- And consult with a financial advisor regarding key financial decisions, like investing in property or preparing for retirement.
Failing to plan is planning to fail
We have said it before, and we’ll say it again: if you don’t take steps now, you might regret it later on in life. It is becoming increasingly more important to become financially literate and to regularly evaluate your financial planning. Our economy is becoming more digitalized and financialized, and as a result we have to make more financial decisions than ever before.
Free consultations are available to anyone interested in trying to improve their financial position, so why not take advantage of that opportunity when it arises? Get assistance, so you can make well-informed financial decisions and make a plan to achieve your future financial goals.