The following is a guest from Eric Hutchinson, a Certified Financial Planner™ with more than 30 years of experience in the areas of financial planning, investments, estate and tax planning. He has professional affiliations with The Financial Planning Association, the Certified Financial Planner Board of Standards and the Investment Management Consultants Association. His new book The Financial Briefing, distills time-tested wisdom based on decades of professional experience and provides an overview of many of the financial and life issues everyone will face at some point.
A typical high school curriculum offers anything from the traditional subjects – language arts, algebra and U.S. history – to the not-so-traditional subjects, such as gardening, therapeutic dance and business technology.
Cracks in the Education System
But despite all those academic options, the educational system is leaving a void in the lives of many students. One thing not being taught in schools is how to manage money and prepare for retirement. A lot of students are leaving high school without knowing what they need to know.
As a result, many students – whether they attend college or go straight into the workforce after high school – don’t grasp how important the time factor is when it comes to saving for later in life. Too many people wait too long to start stashing away money for retirement, so that their retirement fund ends up being tens or even hundreds of thousands of dollars less than it might have been.
If you take the right actions early in life, it will make your retirement much easier. It’s a whole lot harder to play catch up.
Life Tips for Young People
Some tips for those young people entering the workforce so they aren’t left with little or nothing once their careers are complete.
- Think about saving before a life event forces you to. Often a major life event will cause people to begin thinking new thoughts about their futures. The event could be a death in the family, being laid off from a job or a debilitating injury. It shouldn’t take a major life event to remind people to begin to build a nest egg to ensure the financial security of their families.
- Technology can’t replace the human touch. For all the convenience that technology provides us, it still can’t replace the experience of a connection with another person. An experienced personal financial advisor can ask the right questions, provide ongoing guidance, and be an important resource for those who want to plan for retirement. A computerized robo advisor or even a live advisor supporting a robo advisor service often doesn’t deliver the same depth of advice or relationship.
- Most people have been on a roller coaster. Even though the downhill plummet can be a little scary, most people don’t choose to jump off the ride, although they may think that thought! Investing in the stock market* with retirement savings can be a similar type of ride. There will be plenty of ups and downs, but the descent is no time to jump off, even if you do get jittery. Market history suggests that eventually things may work out, if you allow enough time. Although past performance doesn’t guarantee future results, time can be an extremely valuable asset for a young person making retirement investments. Even with the worst of circumstances, people may be OK. As an example, 2008 was one of the worst periods for the stock market since the great depression. By the end of 2010, stocks had recovered enough to erase most of the damage done in the fall of 2008.
If you are trying to get rich overnight, it can be a high-risk proposition. Too many people are looking for instant gratification. Money and life don’t work that way.