By Nicole Louvar, AIF®
We all want financial freedom and success. That’s the heart of the American dream. But no one ever teaches us the financial principles that can help us make that dream a reality. Financial literacy isn’t taught in schools and is rarely passed down through family generations. We tend to just do what our parents did or figure things out on our own. But developing healthy financial habits is essential to experiencing financial independence. Regarding money, here are 6 important lessons I wish I had known when I was younger.
1. The Power of Compounding Growth
This term refers to the powerful investing concept of multiplying your investments by reinvesting what you earn on your initial investment. If you don’t touch this investment, you can exponentially increase your initial investment by sitting back and letting your money grow. This is a very passive way of earning money through investing. The sooner you start investing, the more earning potential you have.
2. Save for Retirement Early
When you’re young, it’s difficult to imagine your retirement. It’s easy to get caught up with buying the next best thing and “keeping up with the Joneses.” But if you’re not careful, debt can creep up on you, and before you know it, you have little to no savings as you approach the end of your career. Implementing good spending habits early in life, such as sticking to a budget, spending what you have, and not relying too heavily on credit cards, contributing to your company’s 401(k) or an IRA, and investing helps to set you up for long-term success.
3. Establish Good Credit
We all know the importance of having good credit. Your credit score is often reviewed when buying a house or a car, when applying for credit cards or other loans, and even sometimes when applying for a tenant lease or insurance. Essentially, your credit score can determine your buying—and earning—power. Therefore, the sooner you establish good credit, the more opportunities you have to increase your credit score, and therefore your earning potential.
4. Create a Long-Term Financial Plan
It takes more than money to feel stability; you need a plan that can grow with you. Many people mistakenly believe that creating a financial plan is a complicated endeavor, but it doesn’t need to be. Your financial plan when you are younger can be as simple as creating a budget, sticking to it, and investing in your retirement. Your financial plan isn’t set in stone. It can and should grow with you as you transition through the stages of life and your circumstances change. The important thing is to continuously review and revise your plan as necessary.
5. Money Is a Tool
Money is simply a tool to help yourself and others. When we shift our perspective from trying to work for money to making our money work for us, we put ourselves ahead of the game. There are many ways to make our money work for us, such as through investing and saving, but it’s equally important to determine the goal for why we are saving. What do we want our money to do for us and why?
One way we can use money as a tool for good is through philanthropy. Contrary to what many believe, this doesn’t require a lot of money. You can start with small goals, such as setting aside a certain percentage of your income or investments to donate to your favorite charitable organization. Then, using the power of compounding growth, you can increase your giving goals as your income increases.
6. Prioritize Your Financial Literacy
As we mentioned before, money principles are rarely taught in schools or the family environment. That’s why we value education and strive to provide helpful financial advice to our clients. For example, we have a client buying his first home and we’ve been explaining how much of his payment goes to interest and that it takes time to build equity. Our blog is a valuable resource for various financial topics and a great place to start when you’re ready to increase your financial literacy.
It’s Not Too Late
While implementing healthy financial habits when you’re younger can provide greater benefits later in life, it’s never too late to take control of your finances. At Guided Capital Wealth Management, we can help you pursue your goals during your working years and into retirement.
Through our proprietary process, The Paradigm FORMula, we create a dynamic plan that can help you reach your financial potential and keep you on track toward your goals, regardless of where you are today. Schedule a FIT meeting using our online calendar or contact us at (832) 975-0711 or info@guidedcapitalwealth.com to learn if we are the right team to guide you on your financial journey.
About Nicole
Nicole Louvar entered the field of financial services in 2000 in a highly specialized role as a commodities trader. She implemented buying and selling strategies for large companies in fast-paced environments. Using her corporate experience and degree in finance, she became Chief Operating Officer for Capital Wealth, a company she founded with her husband, Kyle, in 2018. With her extensive background overseeing business plans and executing trading, it was natural for her to step into the role of creating financial plans for clients. Inspired by her work to help clients reach new milestones, Nicole has now added the role of Financial Advisor to her list of accomplishments. Her passion lies in working with women and helping them become more actively involved in and educated about their finances. Because she spends quality time getting to know her clients, her customized financial plans fit everyone’s unique goals and are supported by sound investment models.
Nicole graduated from New Mexico State University in 1999 with a degree in finance. She currently serves on the NMSU Foundation Board. She and her husband, Kyle, have two daughters who love to play sports. She enjoys volunteering for her girls’ sports teams and at their school. In her free time Nicole loves to cook, travel, and play golf with her family. To learn more about Nicole, connect with her on LinkedIn.