I didn’t begin my career as a financial planner. Although I always had an interest in finance, an early opportunity to work in the music industry and travel the world was too good to pass up. When I came back to the States, I was fortunate enough to get a job offer working in a telecom startup. After the dotcom bubble burst, taking telecom along with it, I made the transition to providing financial advice and investment management.
All of the jobs I had paid well; I never ran into financial trouble, but looking back I realize a good financial planner would have been extremely beneficial in helping me make better decisions. Below are three things a good financial planner could have told me.
Money Gives You Options and It’s Good to Have Options. Years ago, as telecom was crashing, I was stuck in a sales management position in a bankrupt company, and nine of my top ten clients had also declared bankruptcy. In spite of that, my boss’s boss was still demanding that I find a way to meet revenue targets and I knew it was time to leave the company. Fortunately, I had saved enough that I had the option of making a transition to a new job and a new career.
As for the impact of money over the longer term, clients that have saved more as a percentage of their income have more options than those that haven’t and I see proof of this as I meet with clients. Whether the options are changing careers, retiring early or something else that is important to them, clients have choices they can make to cobble together the lives they want. By contrast, those that have under-saved often find themselves in a situation where they have to delay retirement and make tough lifestyle adjustments to be able to meet retirement savings goals.
Start Saving and Investing Early. There is no shortage of articles on how compound growth means saving early offers a big payoff, so I won’t create another one here with charts and graphs and calculations. What I will do is tell you that I have seen time and again the impact early savings has on clients with whom I’ve worked with. If I’m working with clients in their early 30’s who have managed to amass a portfolio of a few hundred thousand dollars, they are almost always on the path to having a strong financial plan. In contrast, clients in their mid to late 40’s that have saved twice that amount may find their plan much more tenuous.
Build on Good Money Habits with Longer Term Thinking. I started cutting grass at 10, got my first official job at 14 and worked in college to pay for most of my expenses. I always had my own money, and that didn’t change once I left college. I earned what I needed and set aside a bit for savings as well, and I never carried much debt. Still, early on, I didn’t plan for retirement or plan for big changes that have occurred in the meantime – buying a house, running my own financial planning practice or having a child. Had I worked with a financial planner, I likely would have saved a bit more early on which would have meant better cash flow and less debt for me now. In short, the solid financial plan I now have in place would look a bit better. If you’re curious as to what a sample financial plan might look like, you can find a few on our website here.
I hope the list above is helpful – in next week’s post, I’ll add a few more items to the list. In the meantime, if you have questions, never hesitate to reach out.