| A friend recently introduced me to her close friend who she said was looking for some financial planning guidance.
As it turns out, she actually needed a great deal of assistance and I was more than happy to help. Let's call her "Mary."
Mary and her husband (both in their mid-30s) have two children under the age of 5. They both work, have some savings (no emergency savings), not a great deal of money socked away in a retirement plan and they have no life insurance. They rent and really would love to eventually buy a home. Mary said they are overwhelmed and don't know where to start in terms of a financial game plan.
Since I have been covering personal finance for 20-plus years, it's never surprising when a friend feels confident to ask me to help guide someone in the right direction. While I am not a financial advisor, I do know a thing or two about money management and personal finance.
I assured Mary that it's never too late to start planning for the future. It may sound like a cliché, but it's not. I spoke with the couple to get an idea of what they were looking for in terms of financial goals. I suggested Mary and her husband meet with a financial professional. I am in the process of setting up a meeting for them.
In the meantime, I did consult with a financial advisor friend so I could give Mary some things to think about right now.
Here's what I relayed to her:
Work together as a couple and set your financial goals. Doing so will ensure that you are both on the same page and make the right financial decisions. Work at creating and sticking with a monthly budget and make sure you live within your means. Manage your debt — and that means avoiding a heavy credit card debt. Look to build an emergency fund.
Personal financial planning revolves around life goals. So, it's time for them to set short-, intermediate- and long-term goals. This means building a written comprehensive financial plan. That plan is important because it allows them to make the most of their assets and helps ensure they meet their personal goals.
Let's be clear: Financial planning requires sweat equity.
It's an ongoing process that should include details about your cash flow, savings, debt, investments, insurance and any other elements of your financial life. A good financial plan is guided by your financial goals. If you approach your financial planning from the standpoint of what your money can do for you — whether that's buying a house, putting your kids through college or helping you retire early — you will make saving feel more intentional.
I told Mary that financial planning can seem like a complicated and intimidating subject. And many people think that financial planning is just for the wealthy. That's actually a common misconception. The truth is that it's a path for anyone who actively aspires to build and gain wealth.
I believe that with good professional guidance and some sweat equity, Mary and her family will successfully meet their life goals.
For more cool stuff like this, be sure to visit CNBC's Financial Advisor Hub and Personal Finance section. |
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