If the very idea of financial planning makes you break out in hives,
you’re not alone. A new study found that perceived financial well-being —
feeling secure about not only the state of your current situation but how well
you’ve planned for the future — holds the key to your overall well-being. Your
financial security can affect you as strongly as job satisfaction, relationship
stability, and physical health combined.
Certified Financial Planner
Board of Standards ambassador Jill Schlesinger calls money the
“most concrete expression of every neurosis we carry. Every neurosis we have,
we can express it around money,” she said. “Someone dealing with your finances
can really be transformative — it’s like removing an anvil from your back.”
First, know thyself,
Regardless of your financial state, everyone can benefit from taking
stock of what stability means for you. Kristin Wong, freelance journalist and
author of “Get Money: Live
the Life You Want, Not Just the Life You Can Afford” knows how
uncomfortable that feels. “It can be hard to sit down and look at the numbers,
especially if you know you’re in mounds of debt but you’re not sure how bad it
is,” she acknowledged. “But think of it this way. Yes, it’s unpleasant now, but
you’re saving yourself from more unpleasantness later.”
For many of us, it all starts with understanding our own habits. Ms.
Wong suggests starting by tracking your spending right down to your 3 p.m.
vending machine run. “This is such an eye-opening exercise because it forces
you to think about your spending a little bit more, which then makes you more
aware of how you’re spending,” Ms. Wong explained. “Writing down your spending
gives the transaction a sense of tangibility.”
Next, figure out
what you want
Whether you’re a recent graduate trying to figure out how to handle
student loans, a retiree looking to maximize your 401(k), or anything in
between, we all want our money to work for us. “Americans need to understand
that [financial planning] isn’t just for the wealthy,” explained Geof Brown,
CEO of the National
Association of Personal Financial Advisors. “It’s important to sit
back and reflect on your own individual circumstances, understanding your
Ms. Schlesinger organizes some basic goals into what she calls the “holy
grail” of financial security. “People have three big priorities in life,” she
explained. “They want to be consumer debt-free. They want to have an emergency
reserve fund, like 6-12 months of your expenses sitting in some boring account.
[And] they want to maximize their retirement account.” Once you have those
figured out — or a plan for how to get there — the real fun begins.
Here’s when to call
in the pros
“Using life events as a prompt is a great idea,” Ms. Schlesinger said.
“Maybe you and your spouse look at finances differently. A financial adviser
can act as a mediator. Because money can be so emotional, bringing in someone
else can help bridge the gap.”
Life events like graduating from college, getting married, and buying
property, all mark great times to start thinking about your financial future,
but there is no wrong time. “My mantra is that it’s never too early to find the
services you need and to take advantage of that knowledge,” Mr. Brown said.
Linda Rogers, of Planning Within Reach in Memphis, Tenn. said her clients
come to her for help prioritizing, at all stages. Even if you know you should
plan for the future, a professional can help you enact and stick to a solid
plan. “With a financial plan, [clients] receive a road map for the future and
someone who catches things that slip through the cracks,” Ms. Rogers explained.
can help clarify the process
While the average person can probably pay down credit cards, set up a
Roth IRA, and do some basic investing online, professionals can help streamline
the nuances of financial planning.
“I liken it to WebMD. You can look up symptoms, but there’s a limit to what
you can do with that information,” Mr. Brown explained. “Finance is the same
way — you can find a lot of things on your own, but you need that deep
Even experienced financial advisers don’t always handle their own cases.
“I find that it is harder to manage my own affairs than those of my clients,”
admitted Barry Korb of Lighthouse Financial Planning in Potomac, Md. “If I was a
doctor, I hope I would know enough not to treat myself. If I was a lawyer, I
hope I would know enough not to represent myself. Yet as a financial
planner/adviser, I perhaps try too hard to manage my own affairs.”
Know what to look
According to Jeff de Valdivia of Fleurus Investment Advisory in
Fairfield, Connecticut, “The term ‘financial adviser’ is so used and misused
that it means almost nothing. A financial adviser should be a person
knowledgeable about financial matters who provides expert advice in a way that
promotes the financial well-being of [their] clients.”
Many people prefer a fee-based adviser, in which the client pays
directly for advice and services, rather than purchasing a plan. You also want
to ensure your adviser took a fiduciary oath, meaning they must legally put
your needs ahead of theirs. Finally, ask if they’re C.F.P. board certified.
That ensures they adhere to a certain level of competence and ethical
The N.A.P.F.A. organization carefully vets all of its members, providing
what Mr. Brown calls a “Good Housekeeping-like seal of approval.” Both
N.A.P.F.A. and C.F.P., as well as the Garrett Planning
Network, provide search functions that can help you gather a list of
reputable planners and advisers in your area.
Less concretely, you also want to feel comfortable with your financial
adviser. Mr. Brown likened a financial adviser to a family doctor — someone who
will be with you over the long haul. Find someone with whom you can let all of
your finances hang out. After all, brutal honesty is in your best interest.
Trust the process
A good financial adviser will help you set a plan for getting and
keeping your finances in shape. Because finances are attached to fallible
humans and, to an extent, volatile markets, plans often grow and change over
time. For Marianela Collado of Tobias Financial Advisors in Plantation, Fla., finances
do not follow a “set it and forget it” strategy. That means adhering to the
three R’s: revisit the plan, recalibrate, and reroute as necessary.
“With each event, things change. Finances change,” Mrs. Collado
explained. It’s important that your adviser remain flexible to revisiting your
plan when and if your life circumstances change. Once you tweak that plan, it
could require a reroute. “Maybe you had built up emergency savings and then
there was an emergency, so you needed to deplete those funds,” Mrs. Collado
said. “We would then reroute what was going to 401(k) savings or investment
accounts back to the emergency funds to replenish.”
Regardless of your
income, you can be helped
Financial health — just like the physical or mental kind — takes time
and effort. “It doesn’t happen overnight. You don’t have to understand
everything about personal finance at once,” Ms. Wong said. “Start with one
thing and focus on feeling good and confident with that one thing, even if it’s
paying an extra $10 a month toward your debt, or learning to say no to an
impulsive purchase. Start small, and you’ll get there.”
And no matter what your past financial life looks like, recovery is
possible. “When it comes to managing money, feeling a sense of power or control
over your situation is crucial,” Ms. Wong added. “A good way to start is to
stop beating yourself up over your past money mistakes. Bad debt, impulsive
spending, too many parking tickets — whatever it is, learn a lesson from it,
but then let it go.”
Click here for the original article from The New York Times.