Financial Planning for the Young and Non-Affluent

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James B. Cloonan is the founder and chairman of the American Associate of Indivdiual Investors (AAII). Last year he wrote an article for the AAII Journal in which he reflected on the financial services industry and his career in running a financial education non-profit as he approached retirement. At the end of the article he mentioned some of his regrets, writing:

I wish AAII could reach a wider range of investors. We are serving mostly fairly affluent investors who already have a basic or advanced knowledge of investing. Even though our membership fees are low and we have tried programs aimed at beginners, we have simply not been able to serve those who really need us the most. The same is true of age. Because of the power of compound returns, the young have the most to gain from effective investing but our membership age continues to average in the low 60s.

I’ve been a Life Member of AAII for nearly two decades now and spoken at dozen’s of local chapters. I’m still below AAII’s average age.

The best part about AAII is that membership in a local chapter inspires its members to invest. And when it comes to investing, doing anything is often better than doing nothing.

Earning, spending, saving, and investing should begin as soon as possible. In our family a financial education began at birth and earning and saving began at age 14. Our safe savings analysis suggests you should save 15% of your take home pay if you are starting at age 25. At that rate you should have saved two years of spending by age 35. If you are starting late you may have to save more than 15%.

Most of us rationalize why we can’t get our finances together right now. Many Americans prolong these excuses during their entire working careers. Here are three lies you must stop telling yourself in order to build a solid financial foundation:

  1. “I will get my finances in order as soon as . . . “
  2. “Now that I look at my finances, I can’t begin to save because . . .
  3. “I can’t save and invest unless or until . . . “

The truth is that no matter how young you are or modest your means are, there are families of four living on half your salary. If you are young and single, this is one of the easiest times of life to start saving. Later, you will have a spouse and children and finances may get harder. For every decade you delay starting to save and invest, you cut your ultimate retirement in half. Starting something now is more important than getting everything perfect.

Like James Cloonan, we too are trying to reach the young and non-yet-affluent who really need us the most. We’ve been working for over two years on our “Do-It-Yourself” service level which opens our investment services to any investor with any amount of assets.

We will help you invest for retirement and guide you through how to do your own financial panning through our exclusive newsletter and Do-It-Yourself checklists.

Now is the the time to get your finances in order and begin saving and investing in the power of compound returns. Your future self will thank you.

Photo by Bruce Mars on Unsplash
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David John Marotta is the Founder and President of Marotta Wealth Management. He played for the State Department chess team at age 11, graduated from Stanford, taught Computer and Information Science, and still loves math and strategy games. Favorite number: e (2.7182818...)