HUNTSVILLE, Ala. — "From a fundamental level, financial planning is a means of thinking about the future as opposed to just living for today." Tammy Trenta is the CEO of Family Financial, and she wants people to understand the importance of looking forward when it comes to money.
The old saying goes, "Don't put off till tomorrow what you can do today." Trenta says, "I think there is a balance between living for today and having things that allow you to live a comfortable life and also setting money aside in the beginning. Setting a foundation right away is really important. We learn so much of our financial habits from our parents and you know, that can be good or bad."
And getting started can be as simple as getting your first check.
Trenta advises, "It can start as early as when you get your first job and you get your first paycheck. And looking at that paycheck and deciding what you're going to do with it. And when we talk about the future, I always use the term pay yourself, right? 50% of it should go to meet your needs. 30% of it should meet your wants. And 20% of it should be investing in yourself for the long term."
Savings is a word we hear over and over, and Trenta stresses its importance. "And so one thing we know about life is things always change. And so you need to be prepared for unexpected things to happen. And so from a fundamental level, you want to, you know, we'll call it an emergency savings fund, but it's money that is liquid that's available to you if you need it."
Wealth is generational, and getting your kids to understand money early may help them as they progress on the financial journey. "Today we're using Venmo or are you using cashless apps? We're using credit cards. And so it becomes harder to allow children to understand the value of money. But there are some psychological, fundamental things that you can do when they're young. So if let's say they get a set amount of money for allowance, they can spend it on a toy or they could spend it on something more meaningful that they have to wait a little bit for. You know, just that concept of delayed versus immediate helps them to understand the concept of saving for retirement and making wise investment choices, says Trenta.