The Importance of Financial Planning in Young Adulthood By Shannon Finn

Financial planning is important for young adults for so many reasons. At Eighteen, I wasn’t sure what financial planning entailed. For me, it was saving every penny and doing my best to not spend money outside of necessities. While working on my undergrad I lived in a bubble, I was kind of an adult (I could take out a loan) but not really an adult (I had no idea how interest worked). I had taken out loans for school, but never thought about paying them back. I thought interest was a noun used to describe a state of wanting to know more about a topic. I rarely pondered my future, my parents paid my bills, life was good. Adulthood was a condition I wasn’t worried about catching. Working forty hours a week at an 8-5 job and paying an electric bill sounded more like fiction than future.

Little did I know, upon graduation, would be channeling Squidward in episode 129 of SpongeBob SquarePants: laying on my back, in shock while moving my arms and legs back and forth repeating the word “future.” If you aren’t a SpongeBob fan, I strongly encourage you to look up this episode, I was four when it aired and it was the first time I experienced an existential crisis. 10 out of 10 would recommend. For four years I happily skipped along in ignorant bliss. Suddenly, I tripped and fell, smashing my face directly on adulthood. It was a terrible time, I was scared and confused. After years of working on a degree I was officially a “real” adult, and it was time for real adult things like paying back my 26k in student debt and figuring out how to pay my electric bill. I was incredibly overwhelmed but also incredibly fortunate.

My parents had the wherewithal to purchase stocks in my name when I was born. Unfortunately, most was lost in the 2008 recession but there was still enough to cover some of my tuition. Upon graduation, I had 4k left in my DA Davidson account which I promptly closed and moved to my savings account. That, in combination with the 2k I saved working as a waitress, gave me a 6k upper hand. I will forever be grateful to my parents and my past self for financial planning. If I could do this over again, maybe I would choose to leave some money in that DA Davidson account, but at the time I couldn’t even begin to understand what a stock was. So, I did what I knew how to do, I saved.

It took nine months to find my first “real adult” job (which only paid $1.50 more than I made waitressing, and was at a debt collection office, talk about depressing). I put each paycheck in my savings account and transferred money as needed, to pay bills or buy groceries, into my checking account. I think every young adult should work in debt collection; the years I spent in the industry taught me so much about living outside your means and the importance of having an emergency fund. I also discovered the other meaning of interest and how important it is to pay attention to your finances. It's easy to bury your head in the sand when bills pile up and finances are tight, but it also makes everything harder down the road. My original financial plan included saving up to buy a fancy new car, although I was the epitome of cool driving my 2003 silver PT Cruiser, I longed for something more reliable. However, after learning more about car loans, and seeing the aftermath of car repossessions, I decided to wait a bit longer and save up to buy a nice used car (paid in full) instead of taking out a loan I may not be able to pay off.

It's been ten years since I entered adulthood. If I had the chance to do it over again, I would do some things differently, like learn how to invest. But there are many things I would do the same like shop second hand or forgo little “luxuries” like a trip to the movies. As a young adult financial planning wasn’t something wanted to think about, now it’s all I think about. I am forever grateful to my past self for the financial plans I made, otherwise, I wouldn’t be here, working on my master’s degree.