Financial planning is not just for those with money to invest. If you’re young and wish to obtain a financial goal sometime in the future, no matter what it is, the earlier you start the better.
The fact is, the more you can put aside now, the less you’ll have to put aside later. For example, consider these two friends:
| Name: | David | Goliath |
| Age: | 30 | 30 |
| Income: | $50,000 per annum | $50,000 per annum |
David doesn’t have a lot of spare money, but sensibly puts aside just $20 per week. Goliath dreams he’s destined for greater things and wants to enjoy life while he’s young. He assumes he’ll easily make up for things when he’s older and needs to settle down. After 10 years
| Name: | David | Goliath |
| Age: | 40 | 40 |
| Savings after 10 years | $14,369* | $0* |
At 40, David has built a good little savings buffer. By now Goliath starts to worry he has nothing to show for his life and wants to make amends. The issue is, by now, even if David put away $20 per month for the next 20 years and David stops saving, David would still be well in front. After 30 years
| Name: | David | Goliath |
| Age: | 60 | 60 |
| Savings after 30 years | $55,603* | $42,635* |
*Assumes an annual return of 7%