In last week’s post, I outlined things I could have learned from a good financial advisor had I been working with one early in my career. The list is – sadly for me – on the longer side, so I wanted to revisit the topic and add a few more items in this week’s blog post. You’ll find them below. 

What I Wish A Financial Advisor Had Told Me

Pay What You Owe in Taxes, But Don’t Pay More Than You Should – I was working in telecom sales at the height of the dot com boom, and I had two very good years back-to-back*. One year in particular my salary was a multiple of any previous year’s salary and my tax bill reflected that. I found an accountant who was accustomed to working with sales folks like me, and when I balked at the size of the tax bill, he nicely told me that I should stop complaining because I wouldn’t be paying so much in taxes had I not been so fortunate. He also pointed out that with a bit of prior planning, I could have reduced my tax bill, but once tax time rolls around options become very limited.

Seek Experiences Over Material Goods – In that same year, I spent a good deal of money on things. I bought a pool table, a car, a fancy recliner, and likely a number of other things I have since forgotten. I also traveled to Switzerland with my girlfriend – who later became my wife. Looking back, the things that meant the most to me were the experiences. This isn’t surprising, as research has shown that experiences tend to bring greater happiness than material goods and even the anticipation of the experience can cheer you up. At this point in life, when it comes to buying things, I try to ask “Why?” whereas with spending money on experiences, I try to ask “Why Not?”**

If You Absolutely Have to Use Money to Keep Score, Base the Game on What You Save and Not What You Spend

Put a Framework in Place, And Use Placeholders If You Need To  – I explain to clients that the core of any financial plan is the framework that plots a course from where you are now to your future financial goals. There are a number of advantages to having such a framework in place, but one of the biggest advantages is that the framework allows you to understand the impact of decisions you make now or your ability to meet what may be distant financial goals. If it is tough for you to imagine the distant future and set goals accordingly, you’re not alone – just use placeholders for goals you think you might have in the future and plan for those. If the goals ultimately change, that’s fine – having the framework in place makes it more likely that you’ll meet the new goals.

Had I run across a financial advisor early on, she may or may not have taken the holistic approach I needed back then. Still, I think my odds of making improved financial decisions in the ensuing years would have increased. If you’re considering working with a financial advisor and aren’t sure what to look for, this list of questions from the CFP Board should help.

* Believe me, at the time this was not hard. If you were selling bandwidth in those years and the company could deliver the service, you were going to do well.

** In both cases, assume I’m considering spending money I’ve budgeted. If I haven’t budgeted the money, the answer to “Why Not?” is pretty obvious.