My first day working in a financial planning firm was Monday, May 12, 2014. That was the first day of my internship with the firm that I still work at today 6 years later. I was just like most other people going into college. I had no idea what I wanted to do, but I thought I wanted to major in business. I went through my first two years of college taking classes and narrowing down my interests until I came down to operations and supply chain management and finance.
I was extremely fortunate to have the opportunity to intern at a logistics firm in Dublin, Ireland the summer after my sophomore year. While the experience was amazing, it made me realize I should probably go the finance route. In another instance of great fortune, I learned about a new financial planning major at Indiana State which I became interested in. I started taking classes and almost immediately knew that’s what I wanted to do. I always wanted a job where I could help others and, selfishly, this would allow me to learn about personal finance and help myself.
I began attending Financial Planning Association quarterly meetings in Indianapolis where I met someone who used to work where I work now. He told me that the firm had an internship opportunity available and that I should apply. I was lucky to get the internship to start my career at a great firm doing what I love in a manner that I believe is best for others.
I’m one of the few lucky ones who have a degree in financial planning and went straight into the field. There aren’t too many who get to say that. I’ve learned a lot of things over the past 6 years working as a Financial Planner and helping others to make their lives better and reach their goals. I’m not sure where the idea came from, but I thought it might be interesting to reflect and narrow down what I’ve had the opportunity to learn to 6 lessons, or one for each year (not necessarily one from each year).
Please don’t expect some profound words of wisdom to follow – you will be severely disappointed. I had a harder time narrowing this down that I thought I would. I hope that you find at least one of these 6 lessons from my first 6 years helpful and that it makes at least a small difference in your life. If this positively impacts one person, then I’ve accomplished my goal.
Lesson #1: Master The Basics
Most people have never even learned the very basics of personal finance nor have they taken the time to educate themselves. And, honestly, I find this to be a tragedy. (I hope that sounds as dramatic as I meant for it to). If you ask me (but no one has…yet), I believe that personal finance should be a mandatory subject in school beginning in kindergarten and continuing through high school and college.
I understand the importance of a well-rounded education and developing different learning styles and ways of thinking. However, I was mandated to learn very many much less practical things that will never be applicable to my life. The only reason that I have any knowledge on personal finance is because I stumbled upon the Financial Planning major when I was at Indiana State University. Otherwise, I would either be self taught or would still have no idea what I’m doing at this point.
Everyone needs personal finance skills and everyone should have the opportunity to learn them beginning at a young age. There are so many resources out there to self-educate on personal finance, but most people don’t take advantage of them. It’s hard to sort through it all and figure out what’s right when there is so much conflicting information. This is where a qualified teacher could help.
If you’ve read any of my blogs this year, then there’s a high likelihood that you’ve come across a lesson I’ve shared from the book Atomic Habits. (I highly recommend it). As James Clear states, “Stop wasting time on the details and commit to the fundamentals.”
Mastering the fundamentals is difficult because it’s not sexy and can be monotonous. Too many people want to get into the game before they even know the rules.
What are the fundamentals of personal finance? Cash flow, long-term thinking, debt management, and risk management. I could throw other concepts in here as well, but I think these are the true basics.
“Without the fundamentals, the details are useless.”
Lesson #2: You Need To Be Prepared For Emergencies
When I learned the financial planning process in college, some of the first steps I was taught to take with a client were to evaluate, develop, and implement a risk management strategy. This is a fancy way of saying that bad things will happen and that we need to prepare for them.
You know that an emergency will happen at some point. It’s inevitable. Yet so many people who can afford to do so don’t prepare for one. The basic here is a properly funded emergency fund. The next step is making sure you have proper insurance coverages in place including homeowner’s, auto, life, disability, health, etc. No one likes to, or wants to, pay for insurance, but it’s necessary for most people to help protect them financially.
Insurance policies can be so complicated and, as the saying goes, the devil can often be in the details. Just because you have a policy in place doesn’t mean that it’s actually doing what you think it’s supposed to. That’s why it’s so important to work with someone who you know is doing what’s in your best interest. If you don’t have a financial planner and you don’t plan on using one, then I recommend using an independent insurance broker to help you with your risk management strategy.
Lesson #3: Most People Have Never Thought About Their Goals
Thinking about your goals and what you want to do with your life is hard. Throw in money and things become even more complicated. However, you’re sure to take the hard road if you don’t have a path set for what you would like to accomplish.
Most people have never thought about their goals because it’s difficult to do, but most things worth having don’t come easy. I encourage you to take some time to seriously consider what your goals are, what you want your life to look like, and how your personal finances play into that. Too often, people let society dictate what their goals are. Not everyone should live the “American dream” because not everyone values that type of lifestyle.
Take some time to do something hard so that you can live a more fulfilling and intentional life.
“If you don’t know where you are going, you might wind up someplace else.” – Yogi Berra
Lesson #4: Most People Still Don’t Know What REAL Financial Planning Is
Financial planning is not stock brokering. It’s not investment management. It’s so much more. If you’re paying a financial professional for these things and you’re not receiving financial planning as well, then you’re getting jipped.
At the surface level without diving down into the specifics, the CFP Board identifies 7 areas that financial planners should help clients with: basics of financial planning, retirement savings & income planning, risk management & insurance planning, investment planning, tax planning, estate planning, education planning. Dive in deeper and there are so many intricacies to all of these subjects.
I believe that a real financial planner should act as a full-service consultant, household CFO, and financial quarterback to their clients. If your financial advisor has never helped you create a path forward that they revisit with you annually and hasn’t helped you with all of the areas mentioned above, then you should start looking for a new one.
There are plenty of awesome financial planners who can help you create a better life through more than just managing your investments and leaving you to hope that you’ll be able to retire some day. Work with a fee only financial planner.
Lesson #5: The Millionaire Next Door Probably Looks Different Than You Think
The Millionaire Next Door is a great book that teaches us how the majority of millionaires in America live. (I’d recommend listening rather than reading as it’s kind of dry despite being so helpful). You know those frugal people next door who have lived in their home forever, drive their cars until they die, and pretty much never have anything flashy? That’s what the average American millionaire looks like. I’ve seen this to be true in practice.
Those who build successful financial lives are often those who are able to maintain frugality and long-term mindsets. A lot of people with great incomes fail to build true financial wealth because they want the world to see it. The problem with the fancy cars, vacations, clothing, jewelry, trips, etc. is that they do very little to help increase the best measure of wealth: net worth. In fact, most of these things contribute to decreasing net worth. A lot of people who look rich are actually broke because of all the debt they have racked up to pay for those things.
When it comes to the true definition of financial wealth iIt doesn’t matter how much you earn, it matters how much you keep. Remain frugal and live below your means, pay yourself first, and learn disciplined investing. So many people get caught up in ramping up their lifestyles once they get a job that they find they’ve lost 10, 20, 30, or more years of wealth building potential and they aren’t sure if they’ll be able to reach their goals or if they can retire.
There’s a time and place for treating yourself and that’s after you’ve thought about the future.
Be like the millionaire next door.
Lesson #6: Money Isn’t Everything, But It Is Important
My job revolves around money. However, I completely understand that money isn’t what we should solely be focused on in life.
Money is a tool and it’s up to you to decide how you want to use it. You can spend it, save it, or give it away. What do you want to do with your money? What impact do you want it to have on your life or the lives of others?
Money can help you make a meaningful impact on your life, your family’s lives including generations to come, and potentially even the world as a whole. This is why I believe you owe it to yourself to be more intentional and wise with your personal finances.
Bonus: Remember To Take Financial Television For What It Is: Entertainment
Financial television is not there to guide you and give your personal advice. The tactics they use are meant to keep your attention and if you pay attention you’ll find contradicting information being presented often.
Turn off the TV and turn to an expert.
