Bad $$ Ideas of the Young

You found the one to start a life with. You now share home, love – and your financial backgrounds with your new partner and family. Here’s what to know and how to tackle debt, budgeting and other aspects of your newly merged money matters.Young couples and families often begin the journey together with a large amount of debt from student loans, car payments and perhaps one or both partners’ past credit card usage. The responsibilities of starting a family only deepen the hole.If you are a young adult still looking for a high-paying job, who can’t afford a home or car and who constantly struggles with debt, then financial planning and effective debt management can help you. So can dispensing the following preconceived money notions common to young families.We don’t need professional help. Young families with debt – especially those with children – need to think hard about meeting a financial planner to put finances in order. A planner can not only set a proper budget for you, but also advise you on how to invest for the best possible returns.For example, planners can advise you on saving for a home, setting up a college fund for your kids and establishing a fund to handle unexpected emergencies.What’s wrong with a little credit card debt? The greatest financial blunder a young family can make is carrying too many credit cards – and the accompanying huge bills and balances.Mitigating and managing credit card debt becomes particularly tricky when these balances typically carry one of the highest rates of interest (often more than 17%). Inexperienced new adults with fresh plastic frequently make the mistake of paying only the monthly minimum. Continuing to do this means paying off the entire balance – assuming a family racks up no more debt on a given card, which is unlikely – will take more than a decade.Attempt to make at least $100 more than the minimum payment on each card account and try to use cash instead of plastic as much as possible. If you or a member of your family has difficulty controlling card use, you can look for assistance from a credit counselor.Let’s fly without a budget. Poor budgeting is close kin to any debt issue. Young couples tend to overspend mostly because they often underestimate expenses and practice the flawed habit of spending first and then planning to save what’s left. Unfortunately, spending incessantly rarely leaves anything at the end of the month.Make (and follow sincerely) a frugal budget, keeping in mind all your daily expenses and saving plans, needs and intentions.Retirement is far away. Many young adults just don’t understand the significance of saving for retirement and so skip investing in 401(k) workplace retirement plans or individual retirement accounts. These youngest wage earners literally labor under a misconception that the future is too far away to worry about, and instead focus on such short-term goals as buying a new car.If you invest at least 15% of your income in retirement savings consistently from an early age, you’ll remain far ahead financially after retirement. Here’s timeless advice for all young adults: You’ll need that money sooner than you think.Follow AdviceIQ on Twitter at @adviceiq.Kimberly J. Howard, CFP, CRPC, ADPA, is a Certified Financial Planner and the owner of KJH Financial Services, a Fee-Only practice located in Newton, Mass. and Denver (781-413-4879). Please visit www.kjhfinancialservices.com. Follow her on Twitter at @kimhowardcfp.  AdviceIQ delivers quality personal finance articles by both financial advisors and AdviceIQ editors. It ranks advisors in your area by specialty, including small businesses, doctors and clients of modest means, for example. Those with the biggest number of clients in a given specialty rank the highest. AdviceIQ also vets ranked advisors so only those with pristine regulatory histories can participate. AdviceIQ was launched Jan. 9, 2012, by veteran Wall Street executives, editors and technologists. Right now, investors may see many advisor rankings, although in some areas only a few are ranked. Check back often as thousands of advisors are undergoing AdviceIQ screening. New advisors appear in rankings daily.