It Is Never Too Early or Too Late to Start Financial Planning

It Is Never Too Early or Too Late to Start Financial Planning

The thing about cliches is, they’re generally true.

In the entire investing landscape, the most often-quoted saying may be: “The best time to plant a tree was ten years ago. The second best time is today.”

Cliche? Maybe. True? Definitely.

Regardless of your age, if you don’t have a financial plan, today may be the day to start one. As a retirement planner in Newark, California, here’s my guide on financial planning (no matter your age), along with some practical tips to help get started on yours.


What is Financial Planning?

Financial planning is the process of looking at your entire financial picture – including income, expenses, assets, liabilities – and setting a course for meeting all of your goals. The purpose of a financial plan is to help you make sound decisions about your money, both now and – more importantly – in the future.

This may include starting a business, saving for retirement, paying for higher education, managing taxes, and buying insurance. Essentially, a holistic financial plan will involve the entire cross-section of where you and your finances overlap.

Since every person and situation is unique, every financial plan will look slightly different. You start with where you’re at, then uncover and deploy strategies to help you set a path toward your goals.

You make your financial plan today for a confident and independent tomorrow. You can create your plan independently or with the help and guidance of an experienced, professional financial advisor.


Financial Planning for the “Early”

Suppose you’re young and already thinking about your retirement goals, great work! You’re way ahead of the curve. Time is on your side, and you’re giving compounding time to do its magic.

Here are a couple of tips to get you started:

  • Start with the end in mind – Think about what your dream retirement would look like
  • Know what you’re invested in – Understand your investments (and double-check the fees)
  • Pay yourself first – Make monthly contributions (and make them happen automatically)
  • Check your credit score – A high score can save you tens of thousands in interest over a lifetime

For more practical steps you can start today, check out the “ladder” advice below.


Financial Planning for the “Late”

It can be overwhelming to realize you’re ten years away from retirement and have nothing saved for it. Even if you’re someone with a few investment accounts funded, you may likely still feel ill-prepared.

A well-thought-out financial plan can help you sort out some of your pressing questions. How much annual income do you need to live on in retirement? How much cash flow do I expect my investments to produce? How much risk can I take on?

Once you’ve answered those questions, you can reasonably target the total portfolio value you will need to accumulate. From there, how aggressive can you be about saving and making regular contributions? How much longer will you need to work?

Beyond answering those questions for yourself (and my guide below), here are a few other things “late” starters may want to consider:

  • Downsize or move
  • Create a budget (and save, save, save!)
  • Take advantage of catch-up contributions
  • Work longer


Practical, Implementable Advice (Personal Finance 101)

If you have no idea how to get financially healthy, here’s a quick “ladder” of how I would prioritize it for a friend. The objective is to complete the 1st rung, then move on to the 2nd, then the 3rd. If you want this to work for you, take it slow and go in order.

  • Emergency Fund – I recommend at least 3-6 months of living expenses, sitting in a savings account. This is your financial buffer.
  • Match Your 401(k) (if applicable) – Most employers offer a 401(k) “matching,” where every dollar you contribute (up to a specific limit of your salary, usually 3-6%) is matched. It’s the closest thing to free money I know of – take advantage of it by contributing the maximum amount that will be matched.
  • Get Out of High-Interest Rate Debt – Credit cards and other high-interest consumer debt are crushing, financially and emotionally. Make 2022 the year you get aggressive about paying it off. 
  • Focus on Retirement Contributions – Once you’ve completed Rungs 1-3, it’s time to open an Individual Retirement Account, Health Savings Account, and make additional contributions to your 401(k).
  • Savings Goals – Do you want to buy a home? A new car? Funding a wedding? Start setting aside money now for all short-, medium-, and long-term goals that are on the horizon.
  • Additional Contributions – Have more money than you know what to do with? Maximize the contributions you can make to all of your retirement accounts. Then, celebrate!

Are you living paycheck-to-paycheck? Do you have no idea where the money for those six rungs will come from? It’s all about conscious spending.


Find out how Humanity can help you pursue your financial goals!


Conscious Spending

As much as I want to tell you to make a budget and stick to it, I’m not – we both know you won’t do it.

I recommend conscious spending instead – intentional about where you spend your money and where you don’t. It can help to review your credit card statement from last month. What surprises you? What disappoints you?

Keep it objective, but make it a point to only spend money on the things that matter to you and cut back on the things you can live without.

At some point, no matter how frugal you are, you may just not be making enough money. Try to negotiate a raise, change jobs, learn a new skill, or start a side job, if your employer permits.

If you’re thinking to yourself, “Wow, that’s a lot,” you’re right. It is a lot. My goal in giving you this system isn’t to make sweeping changes in every aspect, starting today and lasting for eternity. The goal is to provide you with an outlined process to make your way through for the next year, two years, ten years, or however long it takes.

Remember, like your physical health, the best financial plan for you is the one you can stick to. If you pick a diet where you only eat ice cubes, you might see some results at first, but you won’t be able to stick to it for very long. This is a marathon, not a sprint – the ones who come out ahead are the ones who can endure.


Should I Hire a Financial Advisor?

Many of the questions I’ve posed in this article have answers with an objective – and subjective-blend; they’re not clear-cut, yes-or-no questions. Plus, they’re different for everybody, based on their risk tolerance, personal situation, retirement dreams, and legacy goals.

For almost everyone, this is a stress-filled, nerve-wracking, headache-inducing, answer-eluding process that you simply cannot afford to get wrong. Above all else, you want to make sure the assets you’ve spent a lifetime accumulating are preserved, and the ones you care about will be taken care of.

Financial advisors work with people like you every day. This is their world, and it’s what they do. Alleviating stress and instilling confidence are in their DNA.

If you don’t want to go at it alone or are even considering hiring a professional, schedule a meeting with one (or better yet, two or three). Even if you decide not to hire any of them, it may help you clarify your goals and point you in the right direction. 

With over 20 years of financial experience, we help our clients develop a clear, holistic plan to build their financial futures. When you’re ready to pursue financial planning, contact our team of friendly, reliable professionals.


It is never too early or too late to start financial planning.


Don’t put it off any longer: Make 2022 the year you take control of your finances.


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Investing involves risk, including possible loss of principal.
Humanity Wealth Advisors and LPL Financial do not provide legal advice or tax services.  Please consult your legal advisor or tax advisor regarding your specific situation.

More about the author: Harry Sherdil

As a fiduciary financial advisor at an independent firm, Harry strives to offer the same resources, tools, and research as bigger firms while serving new and existing clients' best interests.