The Advantages of Starting Financial Planning Early in Life
Financial planning might feel like something you can put off for later, especially when you’re busy building your career, investing in new ventures, or even considering starting a family. With so many things competing for your attention, pushing financial planning aside is easy. However, taking even small steps early on can provide a significant advantage in reaching your larger life goals.
At The Kelly Group, we understand how overwhelming financial planning can feel in your 20s or 30s. Retirement or long-term savings might seem like distant concerns, but building a solid foundation now will offer more flexibility and opportunities in the future. Our team is here to guide you every step of the way.
Compound Interest: Your Secret Weapon for Starting Early
Compound interest is one of the most powerful tools working in your favor when you start financial planning. While the term might remind you of high school math, it’s simpler—and more impactful—than it sounds. The earlier you begin investing or saving, the more time your money has to grow exponentially.
For example, if you invest just $100 a month in your early 20s, by retirement, those small contributions could accumulate into a substantial amount, thanks to the power of compound interest. Even starting in your 30s, while later, is a significant time for your money to grow.
The key takeaway? You don’t need to start big. Even modest early contributions can give your investments the time they need to grow, positioning you for more ambitious financial goals.
Building Strong Financial Habits In Your 20s and 30s
Establishing strong financial habits early on is essential to achieving your larger dreams, such as starting your own business, purchasing multiple rental properties, or planning early retirement. These habits ensure your money works for you and help you achieve your broader life goals.
Some habits to consider starting early:
Budgeting: Track your spending to stay in control of your finances, making sure you allocate enough to savings, investments, and long-term goals.
Consistent saving: Even setting aside a small percentage of your income can grow over time. Automate contributions to high-yield savings accounts (HYSA) or investment portfolios to maintain momentum.
Avoiding lifestyle inflation: As your income grows, resist the urge to increase your spending. Instead, direct that extra income toward investments, real estate, or business growth.
Paying off debt strategically: Whether you’re managing student loans or a mortgage, paying more than the minimum helps free up cash flow to invest in future opportunities.
Building an emergency fund: Setting aside 3–6 months of living expenses in a HYSA can safeguard your financial plans in the face of unexpected events.
Flexibility and Time to Take Risks
Early financial planning gives you more than just stability—it offers the flexibility to take calculated risks that can accelerate your success. It can open doors to investing in a high-growth asset, launching your own business, or moving to a new city for better career opportunities.
For example, younger investors may feel uncertain about certain asset classes. However, by starting early, you can ride out market fluctuations and see your investments grow over time. Likewise, if you dream of starting a business or expanding into real estate, a solid financial plan gives you the confidence to take bold steps. The earlier you begin, the more room you have to adjust your strategy as your circumstances evolve.
Setting Future Goals and Dreams
The drive to achieve your long-term goals is at the core of financial planning. If you’re focused on purchasing your first home, building generational wealth for your family, or retiring early with financial independence. Starting early gives you the time and space to pursue those dreams.
Here’s something that can help:
Allocate savings for specific goals: Whether for a new home, your first rental property, or even a dream vacation, designating specific funds for each goal keeps your plan on track.
Maximize retirement contributions: If your employer offers a 401(k) match, take full advantage of it—it’s free money that can jumpstart your retirement savings. If you don’t have access to an employer plan, consider opening an IRA to build your retirement fund independently.
Understand your investments: Know where your money is invested, how it’s growing, and how it aligns with your long-term financial goals. Working with a financial planner can help you regularly review your portfolio, ensuring it’s working in your favor and adjusting it to meet your evolving ambitions.
The Kelly Group is Here to Help
It’s natural to feel uncertain about where to start with financial planning, especially when your goals are as big as owning multiple properties or retiring early. The good news is you don’t have to have all the answers right now. Financial planning is a journey, and The Kelly Group is here to guide you every step of the way.
Want to expand your investments, create a comprehensive retirement plan, or build an emergency fund? We’re here to listen and provide tailored advice for your unique situation. We've helped clients across Bel Air, Harford County, Maryland, and beyond take control of their financial futures, and we’d love to offer that support to you.
Reach out today to connect with one of our trusted advisors and start building a financial plan that works for you.
The Kelly Group is a trade name of Kelly Financial Group, LLC, a registered investment adviser with the Securities and Exchange Commission ("SEC"). Registration of an investment adviser does not imply any level of skill or training. For more information about our services, please use our Brochure and Relationship Summary, available on the SEC's website at www.adviserinfo.sec.gov, and on The Kelly Group's website at www.kellyria.com.