Continuing from our last post interviewing financial advisor Jeremy Whiddon, in this post, we will discuss more advice for high schoolers heading into college!
How to be Financially Prepared for College - Starting Young
When discussing advice to prepare for college, one of the biggest pieces of advice Whiddon mentioned was to start saving young. Not many people understand how important saving is, especially for large financial transactions such as college tuition. By saving early, you can invest and grow your savings. For example, if you invest $1,000 per year in the stock market, it essentially doubles every seven years with strong growth.
Additionally, he emphasized learning more about finance while you're young. When it comes to budgeting, there are multiple methods, but Whiddon recommends having bills automatically deducted from your paychecks. This way, it creates less stress to pay these dues and puts you one step ahead financially. The younger you start with these practices, the more financial power you gain.
Investing - Roth IRA
Saving is the easy part, but how should you invest? Whiddon recommends taking a portion of your earned income and using it towards a Roth IRA. A Roth IRA is an individual retirement account funded with money that has already been taxed. This way, the money that grows in your account is tax-free, and you do not have to worry about being taxed when withdrawing the money, unlike a Traditional IRA.
When withdrawing money from a Roth IRA, there is an exception. In most Roth IRA accounts, you must wait until you are 59 ½ years old to withdraw any accumulated money without being taxed, but you are allowed to withdraw the principal amount before this age.
What to Expect at Financial Advising with OnTrack Wealth Management
The first step is a discovery meeting to get to know the client. In this meeting, the client can expect to discuss their goals and where they want to see themselves financially in 2-3 years. Based on the client's answers and needs, the next step is to start on financial planning, which includes assessing the current net worth, spending vs. saving habits, and investment portfolio, and finally building set recommendations. OnTrack aims to always do what’s best for their clients.
Concluding Statements
“College is a great experience and a super fun place to learn and meet new people. Outside of that experience, be careful, and try to build good habits that will carry into adulthood.” Jeremy Whiddon also recommends not going off the rails during this time and buying trendy items. Instead, establish long-term habits and build muscle memory.
For more information about OnTrack Wealth Management, visit their website: https://ontrackplans.com/.
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