We’re in the midst of graduation season. Many young adults are venturing into the world of grown-ups and reality. It can be daunting, especially when they are now responsible for managing their own money – how they spend and save.
If you’re deciding on what to give a new graduate, consider giving them their own financial plan. Most firms will charge $1,000 to $3,000 for a financial plan. Some firms may require you to use their investment management services. Other firms will charge a flat fee for a financial plan. (We charge $2,000 for our financial plan.)
During college, your graduate followed their college’s catalog. This catalog identified which classes they needed to take in order to attain their degree. Unfortunately, life doesn’t come with a catalog to show them how to live. That’s where a financial plan becomes important.
A financial plan will help your graduate define the lifestyle they can afford now and the lifestyle they want to attain. It will help them identify their financial goals beyond building an emergency reserve and saving for retirement. (We use the 5 P’s of Life to help define financial goals.)
A financial plan will identify how they spend and save money. If they have a full-time job, they may be earning more money than they have ever experienced. A financial plan will encourage them to think beyond buying a larger TV for their gaming or the latest designer clothing. And if they need to repay their college education loan, a financial plan will help them balance debt reduction and growing savings.
Before purchasing a financial plan, find out what will be addressed in the plan. You want a comprehensive plan – one which goes beyond investing. A comprehensive financial plan will at a minimum include analysis of assets and liabilities, income and expenses, taxes, asset protection and estate planning. (Click here to read what’s included in our financial plan.)
Figuring out what to buy a new graduate can be challenging. Give them a lasting gift with a financial plan. It’s better to be proactive with teaching young adults about money versus constantly bailing them out of poor financial spending.
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ABOUT THE AUTHOR:
Niv Persaud, CFP®, CDFA™, CRPC®, is the Founder of Transition Planning & Guidance, LLC. Life is more than money. It’s about living the lifestyle you want and can afford. For that reason, Niv consults with clients on money, life and work. Her approach capitalizes on techniques she learned throughout her career, including as a management consultant, executive recruiter and financial advisor. Her services include spending plan, financial plan, divorce financial review, life strategy and professional progression. Niv actively gives back to her community through her volunteer efforts. She believes in living life to the fullest by cherishing friendships, enjoying the beauty of nature and laughing often — even at herself. Her favorite quote is by Erma Bombeck, “When I stand before God at the end of my life, I would hope that I would not have a single bit of talent left and could say ‘I used everything you gave me’.”