It is inarguably advantageous to begin financial planning at the outset of your career. At SeaGlass Wealth, we work with clients in all stages of their lives, careers and retirement but the earlier we can get started planning and strategically saving, the better. As your work and career evolve we aim to build up the financial foundation that allows our clients to live comfortably and true to their values.
We often see clients who have recently finished post secondary and are beginning their career with student loans and debt. This is a point in life that comes with a lot of decisions, many that will predict the trajectory of one’s financial future. We see some clients working two jobs to pay down their debt while we see others buying property and increasing their debt. Both of these scenarios are ones we can work with and plan for. Regardless of the age or career stage of a new client our conversation begins by determining values.
We love the conversation about values. We often use a deck of cards that offers options for prioritizing values to do with philanthropy, family, leisure, community, lifestyle and more. We guide clients through an activity which maps their values and goals, long and short term. There is a benefit to this discovery process at any age, but the advantage of having this conversation with a client just starting their career journey is the time available to build wealth.
Debts like student loans and mortgages can play an interesting role in a financial profile. We approach debt as a tool, a part of your financial profile, not always a negative. For some, we don’t advise paying down an interest-free student loan as you would a different type of loan, depending on rates and terms. Money might be more valuable in other investments than debt repayment. Borrowing can be an important financial tool. We look at how to manage debt rather than how to pay it off quickly. We also look at creating habits and workflow that encourage savings and putting money away intentionally to work towards holistic financial goals. Taking advantage of low rate student loans and making use of high rate savings strategies can optimize the money being earned in those early stages of a career.
Debt is a financial tool
One noticeable difference between older and younger generations is aversion to debt. Older generations shy away from debt. Younger generations tend to be more comfortable with risk. They’re looking at rates, projections and deployment of cash. Putting large percentages of earnings towards a loan can leave clients without anything liquid to spend on opportunities or emergencies. Debt can help you move forward in other areas like investment either in property, assets, experiences, education or investments. We look at the combination of interest rates – both borrowing and investment rates. If you can make more with your investment than you’re paying on your debt it may be beneficial to manage that debt rather than pay it down aggressively. All debt can be a financial tool as long as it’s managed with intention over time.
Put out the F.I.R.E.
Some young clients come to us with questions about the F.I.R.E. mentality. This stands for financial independence, retire early. This involves severely cutting spending, paying down debts and maximizing savings for up to two decades with the intention of retiring early and having money to spend at that time. It’s our experience that this approach doesn’t pay off. Compromising values like lifestyle, leisure, travel and experiences during the healthiest years of life rarely leads to successful results or happiness. We see some clients with healthy bank accounts at 40 years old but having worked extreme amounts with little exposure to joy and relaxation, they’re not sure how to spend as they age. In fact, spending generates stress, so when the time comes to enjoy their saving efforts they cannot do so without significant discomfort.
Our focus is on building net worth over time. We encourage clients to set goals around assets that will grow in value like a home or investment and balance this with spending that aligns with values like family, travel, enrichment and experience. Depending on the aspired type of career or work, retirement is becoming less of a destination. Financial freedom allows for working throughout your life in the way you choose. Financial sustainability sets our clients up to have choices when it comes to career changes, sabbaticals, promotions and time off.
Using values as the foundations from which to make decisions, we work with clients to make a comprehensive plan to set them up from the beginning of their career to have stability and options at all times, no matter what life throws their way.
A Strong Foundation
Especially when beginning financial planning early in your career, you want to have a very solid foundation. Within that foundation, the fundamentals are values based. Risk Management is another core element. Career, investments, debt repayments and earnings are going to play major roles in financial sustainability and the infrastructure of your portfolio. Allowing for fulfillment and opportunities while preparing for unexpected challenges is vital to success. Planning smart and planning early allows clients to truly create a life they don’t need to retire from. A strong foundation builds financial freedom. Rather than the F.I.R.E. approach we encourage a values based, steady approach to building a sustainable and comfortable financial future. We aim to set clients up to have the financial freedom to make decisions that serve them, enriching their life, at any age.
No matter what stage of your career you’re in, these conversations and future planning are important. Get in touch with Tracey and Kristina to discuss your financial foundation. https://seaglasswealth.com/contact/
We are looking forward to the opportunity to meet you! For more information, please feel free to reach out.
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