The Gift of Financial Education for the Graduate in Your Life

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With financial adulthood comes a number of firsts – apartments, loan payments and other complex decisions are all made when rents are high and starting salaries are low.

So what if this business-going young adult could rely on an educated, trusted guide who could share the magic of compounding or show you how a 22-year-old instead of 32 can turn a little money into hundreds? thousands of dollars later?

If you are close to someone entering this new phase – from high school, college, or somewhere in between – giving professional advice can be one of the most effective ways to get them on the right track.

There are many ways professionals can help by deciphering health insurance plans or making sense of a new 401(k) or other retirement plan. Many college graduates will have made at least one tremendous decision by borrowing money for higher education, and they may be stressed about how they will manage when those loans come due this year.

Financial information comes in many forms, so highly motivated individuals can figure out how to do it. navigate on their own. But there are many snake oil sellers, and TikTok videos and crypto-hyping friends don’t always provide solid advice. Spending a few hundred dollars on guidance, even if it’s not the most convenient option on the spreadsheet, can help prevent more costly mistakes while providing support for making more thoughtful financial decisions.

“Often I create plans that don’t require people to do the mathematically optimal thing, but are just right for them,” said Cristina Guglielmetti. financial planner Offers a package for recent graduates in Brooklyn.

The good news: Financial advice has become more affordable in recent years. Here’s a look at what a recent graduate can discover during a session, how to find the right kind of professional, and where to find help you don’t have to pay for.

A major focus will almost certainly be on handling your cash flow and overall money management.

“If I can totally refresh someone, I want them to look at what they want to look at in five or 10 years of their life and understand what that will bring financially,” he said. Anna N’Jie-Counte, a financial planner in Maryland.

Then, once the money is set aside to meet basic needs like rent and food, it will help shape reasonable savings goals. Everything else goes to discretionary expenses. Getting the formula right may take some adjustment, but it adjusts the finances so a new graduate doesn’t have to think too much about budgeting—essentially spending whatever’s left.

Ms. Guglielmetti described it as a way to get back to safe spending numbers and provide “a scarecrow against lifestyle creep”.

Recent graduates can get help with things as simple as how to read a payslip full of abbreviations. Financial planners can also advise them on creating a 401(k) or other retirement account and choosing investment options, deciding what to do when they are offered stock compensation, and automating their financial lives as much as possible.

Financial advisors have long had a reputation for focusing on older, male and higher net worth families.

“For a large part of the population, there was a time when that counselor didn’t have much in common with them,” he said. Kevin Mahoneyis a financial planner in Washington DC focusing on millennials. “This is no longer the case.”

It’s a good idea to seek out a peer – or someone who can better relate to their situation – to give graduates access to someone who aligns with their background and needs.

But personality is also important: When reaching out to potential counselors, take note of the types of questions they ask and in what order. Some professionals may focus more on numbers, spreadsheets and tactics, which may be good for certain graduates. But others may benefit from a counselor who focuses on the individual first and is open to the emotional aspects of money.

Mr. Mahoney said many people were not asked what they found most stressful about their finances, and that giving them space to think might provide a better plan. For example, student loans can make them nervous because they grew up in a household with a lot of debt, which could affect a counselor’s recommendations.

Credit…Kevin Mahoney

And empathy for those feelings can bring out an otherwise reticent young person. “You can see it in people’s faces – they start going right away,” said Mr Mahoney.

He also echoed Ms. Guglielmetti’s view that what looks ideal in the spreadsheet isn’t always the most important thing. “For some people, the thought of paying back debt over 20 or 25 years – even if the math says it’s the optimal decision – feels debilitating,” he said. “If this strategy makes them less optimistic or confident about managing their money, they may not be able to make much financial progress in the long run and may need to take a different approach no matter what the math says.”

A younger adult may not need more than one or two meetings—perhaps one in-depth and one shorter. You can expect to pay anywhere between $200 to $450 or perhaps $500 an hour for a package. If you’re a recent graduate seeking advice on your own, feel free to ask for a payment plan or pay in several instalments, experts say.

XY Planning Network, Garrett Planning Network and National Association of Personal Financial Advisors They are membership organizations that include hundreds of certified financial planners who charge for their time and services, but do not receive money or commissions from products sold, helping to minimize conflicts of interest. More specifically, you can find planners that charge per hour or per project – in other words, you can pay them a single flat fee, whereas more traditional planners require a minimum asset and charge a percentage of those assets.

Group planners also work as trustees, which means they must put their clients’ interests first. If an advisor doesn’t promise to act as a trustee, find someone else who will.

Experts said that if your graduate will pay for the job himself, he may find a professional willing to work pro bono – something more common during the pandemic.

And professional advisers said that sometimes it may not be the best option, as graduates try to pay off credit card debt. Mr Mahoney said he tends to recommend financial coaches for them, which may be less expensive. submit online materials and videos to help customers attack their debt.

There are also services included. Institute of Student Loan AdvisorsIf their biggest problem is student debt, .

There are ways this gift can go terribly wrong: If the graduate doesn’t accept it, or if the adult giving it becomes too intrusive. Financial advisors point out that adults should give the gift, then step back and let the professionals do their work.

It is important that your recent graduate is comfortable talking to the counselor, and this may not be possible shoulder to shoulder with a family member.

“The person needs to be on board and you go a little deep about it, so they need to be ready,” said Ms. Guglielmetti. “My client is a graduate, not a parent.”

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