For example, nearly six in 10 of all respondents with a plan (59%) said they are confident they will have enough retirement savings to live comfortably, compared to just a third (34%) without. Even without a financial advisor, individuals who follow a clear financial plan said they see real benefits at every stage of wealth building, including those with a net worth under $50,000, the survey found.

“A plan helps you understand what your picture is and what your journey will be, and gives you a sense of security,” Phelan said. “People who have a plan feel more confident about weathering storms and more secure about an otherwise really stressful topic.”

Take advantage of the tools
To get started, Phelan encouraged young people to explore some of the online resources available.

“There are so many tools — ours included — that make financial planning and financial literacy much more accessible,” Phelan said.

Once you’re familiar with financial basics, you should start building a plan, she said. “Don’t wait until you think you have enough money. Don’t wait until you think that you’ve achieved some arbitrary milestone of success. The sooner that you lean into engaging with your money, the better off you’re going to be.” 

The format of the plan – software, spreadsheet, back of an envelope — doesn’t matter at the beginning. The important thing is to get it in writing and get started, she said.

“Having it in writing is mission-critical, because how else are you going to keep yourself accountable at the end of the day?”

Consider the elements of a plan
Financial plans are highly personal, Phelan said, and should be aligned with an individual’s means, needs, goals and time horizon. In general, here are five key elements that should be included in a plan:

• Financial goals – Giving some thought to what you want to accomplish with your money is the foundation of a plan, she said. The goals could be shorter term (such as paying off credit card debt), medium term (saving for a home downpayment) or longer term (building a comfortable retirement nest egg), and ideally a combination of all three.
• Budgeting – Phelan advised looking back at three or four months of expenses to see where your money is going. Then determine “needs” and “wants,” and consider reducing unproductive spending. “You work hard for your money; you should enjoy it, but you also might want to find areas that can be painlessly cut so those funds can be saved or invested.” 
• Emergency fund – It’s helpful to build a fund of three to six months of expenses in case an unexpected cost crops up, like a car repair, Phelan said. The fund can be kept in a liquid, FDIC-insured account like a money-market account or high-yield savings account.
• Debt and risk management – Some recent college grads face the pressure of college loan repayment, as well auto loans and credit cards. Phelan advised paying down existing debt consistently and being mindful of taking on new debt. To mitigate risk, young people should consider insurance – health, dental, auto, rental/homeowners, etc.
• Investment strategy – Since your financial goals are powered by your investments, Phelan suggested “paying yourself first.” Young people who have access to an employer’s tax-advantaged retirement plan, like a 401(k), can contribute to the plan through payroll deductions before it can be spent. An individual Retirement Account (IRA) is another option. (See Phelan’s colleague Jonathan Lee’s thoughts on how a young person can build a retirement fund.) Starting early is a key, according to Phelan. “The sooner you start investing — even just a small amount — the more time it will have to grow.”    

Keep your plan alive
“A financial plan is a living document,” Phelan said. Many things may change in life: jobs, marriage, children, new goals and more. Phelan suggested reviewing the plan regularly, at least annually, and tweaking it if needed to align with the new realities of your life.

Consult a professional
As you move forward in life, your finances may become more complicated – mortgage payments, children’s college tuition, tax and estate issues, and more. If you outgrow “do-it-yourself investing,” Phelan recommended reaching out to a financial advisor.

“A financial advisor can help young people map out realistic goals and build a clear, actionable plan to reach them,” she said. “They can build on what you’ve already accomplished and keep you on track toward reaching your goals.”

Now’s the time“It doesn’t matter if you have $200 or $200 million; you need to know what your financial picture is, and a financial plan is the most straightforward and effective way to do that,” Phelan said.

Despite its challenges, young adulthood is an ideal moment to take control of one’s financial future, she said.

“Creating a financial plan isn’t just helpful — it’s essential.”

Read the full survey here.