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  • Alan Sell

Ingredients for Financial Planning Success: Time

Updated: Apr 21, 2022

Starting Early Matters!

The other day, I met with a young couple for the first time. They were just about to have their first baby, and they wanted to make sure their finances were in order. We found a couple of spots where they could shore up their plan: they needed a bit of life insurance, and we set some goals for their retirement savings. The couple is young; they won’t have the biggest retirement accounts of anyone I meet with this year. But they’re near the top of the list when it comes to one very important asset: time.

It's not just about compound interest!

We’ve all heard the examples about compound interest: “If you start with just one penny and double it every day, in a month you’ll have $10 million.” True, though I’m not sure I know of an investment that can replicate those results. But there’s another component to the benefits of starting your financial planning early.

Setting Life Goals

Engaging a financial planner has a way of clarifying what you’re really trying to do in the world. Are you trying to fund your kids’ educations? Save for a new house? Retire someplace special? Leave a legacy donation to a non-profit? A good financial planner should bring these kinds of dreams to the forefront so you can start to move on them. And by starting early, you can make sure you’ve got the right resources in the right places to make sure it can happen.

The Trouble With Waiting

Many families wait to start planning until they’re getting very close to when they’d like to step into their goal. Sometimes, this can really hamstring their plan. College planning can be a great example of this. If you’re looking for financial aid, the FAFSA (Free Application for Federal Student Aid), which is often required by schools and individual scholarships as well, looks back two years from when you apply to determine what aid you qualify for. If you want to make sure your assets are in the right places to maximize your student aid package, you’ve got to have it all set two years ahead of time, which often means planning even further in advance.

I love meeting with young couples like the one mentioned earlier. Just starting out, so many of their best years are ahead of them. They did a great job clarifying their goals and setting a course. And because they chose not to wait, they can make sure that their most important dreams come to fruition.

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