The purpose of financial planning is to attain financial security, which everyone defines differently.  In the ideal situation, we start early, establish goals, develop a plan, and consider as many contingencies as possible.  For example, we just helped some twenty something’s with a retirement plan, permanent insurance, and an emergency fund. Assuming they stay the course, they will have few money concerns.

At 25, they were able to get a universal life insurance policy with a death benefit of $800,000, for only $50 a month.  Now, that is a great death benefit for the children that they do not even have yet! In addition, however, the policy accumulates cash value.  In the first years, that value is zero, but after 10 years or so it starts to build up, and this gives you flexibility.  You can borrow against the policy if you need to, or take cash value and reduce the death benefit.  If you do nothing, the accumulated value could exceed the original death benefit. Every case is different, and who knows what types of policy will be available.  The point is, the earlier you get insurance, the lower the cost.

At $100 a month over 40 years, assuming a 7% average annual return, they will each have $274,301 in their Roth IRA accounts.  This will be tax free money in retirement!!  This assumes that they never increase that contribution.  Once they contribute to a 401k at work, they will have more than enough money for retirement.  And, they will be able to enjoy a good lifestyle, because they know their savings are on track and their life insurance is covered.

$50 a month to an emergency fund will help them cover unexpected costs, like a new refrigerator or a broken window.

Assuming they purchase reasonable homes and cars, they will have a financially secure life.

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