Taking financial advice is often associated with older generations, perhaps as they plan for retirement, sell a business or set out their estate plan. But it can prove just as vital for young adults who are often facing various financial commitments with a conflicting mix of short, medium and long-term goals.
Whilst you may not be part of the millennial generation, you may have children or grandchildren that could benefit from working with a financial adviser even if they don’t believe they’re at a point in their life where it can help.
According to research conducted by Scottish Widows:
- 73% of people want a financial adviser to help predict how major life moments could impact finances
- 24% of millennials want an adviser to offer real-life scenario exercises
With this in mind, financial advice can help young adults make sense of the financial decisions they’re making and how it’ll influence the long term. At a time when they’re likely to be juggling saving into a pension, buying their first home and starting a family, advice can help give them confidence in the decisions they’re making.
Planning for milestones
Whilst everyone follows a different path, there are some milestones most of us hope to tick off and it’s not surprising that more than seven in ten people want to understand the impact of these major life moments. With young adults far more likely to have several milestones they’re working towards, it’s a key area where financial planning can help.
Whilst milestones are often driven by factors that aren’t finance focussed, money will usually have a significant influence. With average house prices exceeding £225,000, for example, the decision to step on to the property ladder will have a financial impact for years to come.
Reaching a life milestone is often a time for celebrating, but, when thinking about money, it can be worrying too. Planning for them financially can help give young adults confidence as they progress towards their goals. Whether they want to ensure they can build up savings to support young children through university or are starting to think about the retirement they’d like post-work.
Modelling potential events
One of the reasons striving towards life milestones can be so daunting is the fear of the unknown. Effective financial planning that incorporates cashflow modelling can further add confidence about the short, medium and long term.
A quarter of millennials said they would want financial planning to model the impacts of real-life events, such as marriage, divorce or having a family. It’s a figure that’s four times higher than those over the age of 35. The research indicates that younger generations could benefit from forecasting their wealth and how both planned and unplanned events could have an effect.
Cashflow modelling can provide visual representations of how wealth will change over time depending on various decisions and events that happen. It’s a process that can give millennials the confidence to forge ahead with plans and take precautions to protect their financial security where necessary.
Looking further ahead
Often when we think about milestones we want to achieve, it’s those that aren’t too far in the distant future we focus on. However, millennials may find that working with a financial adviser helps them to look further ahead to retirement. Whilst most young adults will already be saving into a pension through their workplace, it’s not likely to be a priority, after all, there are other areas to focus on that are more immediate.
Yet, with retirees having to take more responsibility for their income after work, some are facing an income shortfall. The earlier you engage with pension planning and retirement finances, the more likely you are to achieve the lifestyle you hope to look forward to. For millennials, retirement is probably still at least three decades away, but taking even small steps now could have a huge impact.
Financial advice can help put decisions made into context, particularly the impact they’ll have immediately and further down the line. It’s a step that could help the next generation find their feet and pave the way to a financially secure future. If you’d like to better understand your financial situation, please get in touch.