Does someone in their 20s and 30s need a Financial Planner?

There is never a bad time nor is it too early to engage a financial planner. In fact, the earlier the better. Even if you are early in your career and don’t have many assets, you can still benefit from estate planning.  Here are some of the instances where a Financial Planner can help even a young person with limited assets:
  • Importance of a Will. Virtually everyone over 18 needs a will.  If you die “intestate”, meaning not having prepared a will, state law will determine your beneficiaries for you. If you have multiple loved ones, you may want to be the one and not the court that decides how your assets and belongings are split up.  If you have set up your “Payable on Death” (POD), or “Transfer on Death” (TOD) beneficiaries on your financial accounts that is one positive step towards deciding which family members receive your assets without going through court.  Also remember that these PODs or TODs supersede a will’s declarations.
  • Having an Advanced Medical Directives. No one wants to think about unpleasant facts of life, but there are occasions when people are on life support or a ventilator at the end of their lives.  Your family will be very conflicted on what you would want unless you have previously made the time to have a conversation with them or set in writing what your wishes would be. It is a relief for the family to not be forced to make such a difficult decision and basically guess what you would want.
  • Life, Health & Disability Insurance.  Are you adequately protected in case of illness or a short or extended disabling event? An adviser can assess your plan and determine if your coverage is adequate. Do you have enough life insurance to cover those that depend on you in case of death.  What type of life insurance should you get?  It is my opinion that life insurance is pure replacement of income. Wrapping it inside an investment complicates things and muddy your objective.
  • Development of an Emergency Fund.  You need 3-6 months expenses saved up in an emergency fund that is NOT in an investment account. This will cover you in the case of a job loss or large unexpected expenses that may come up.
  • Investment advice. What type of investments do you have? Are they appropriate for your goals and the stage of life you are in?  Even if you feel comfortable making decisions on investments, second opinions don’t hurt.
  • Employee Benefits, Mortgages and Major Purchases.  Are you maximizing the benefits provided to you by your employer. How long of a mortgage should you get? Should you pay points to lower the interest rate? How much house can you afford? Can you afford a new car at this point, or should you wait? Should you buy or lease?  A financial adviser can provide advice on these topics.
  • Marriage.  Your documents will need to be modified once you get married. Your life insurance needs to be re-assessed. A financial adviser can help you with these matters and more.

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