TL;DR: Some people will tell you not to bother with a financial planner because you should be able to figure it out yourself, with help from their Gumroad course. I am not one of those people. A year of financial planning with a CFP® (Certified Financial Planner) has prompted my family to make the following financial improvements:
Budgeting more efficiently
Increasing retirement contributions
Increasing life insurance outside our jobs
Putting charitable giving in the budget
Here's the long version...
Shortly after the Heavy Metal Husband and I got married, we realized we had a good problem: too much money. ("Must be nice...") When we moved in together, all of a sudden we had just one housing payment instead of two. The money that HMH had been spending on rent and utilities was now up for grabs... And we wanted to make sure it was put to an effective use.
HMH suggested we go to a financial planner; according to him, I gave this idea the "hairy eyeball" but eventually relented. So we made an appointment with the Ameriprise agent, Matt, who manages my 403b. He's a CFP® and was already handling one aspect of my finances, so it seemed like a logical choice. The cost was $800 for one year of advisement; it's hard for me to shell out money sometimes, but this was a cost that would pay off in the long run.
(CFP®s are highly trained and certified by a the CFP Board, which holds them to something called the "fiduciary duty." In other words, they are obligated to act in the best interest of their clients, not just something that's favorable. Read more here.)
At our initial meeting, we discussed goals and then got sent home with a packet to fill out about our expenses. This made me look more closely at what I was spending each month as well as costs over the course of a year -- for instance, things like pet food had just been lumped into the "miscellaneous" category. Same for things that didn't necessarily happen every month but were a regular part of life, like clothes and subscriptions. I had just treated these costs as miscellaneous expenses when they came up, rather than budgeting for them specifically.
So that was my first light bulb thanks to giving someone eight hundred bucks to make me fill out a packet: I could plan for regular, non-monthly expenses rather than needing $1,000 of "miscellaneous" cash in my budget every month to cover them. This gave me a much better idea of how much money was truly unassigned, versus how much of "miscellaneous" was really a recurring cost like "oil changes" and "Fancy Feast."
(Not my actual cat!)
When we returned for our second appointment with our packet dutifully filled out, Matt plugged in our current expenses and savings to a program that accounted for inflation and different scenarios like paying off a mortgage. This program first showed us what retirement would look like if we kept our savings the way it was. Let's just say that outlook wasn't the amazing early retirement on a private island I'd been hoping for...
Matt's follow-up was suggesting that we max out Roth IRAs. He plugged in some more numbers and magically, we were a lot closer to that private island -- like maybe we could visit someone else's island once in awhile. I already had an IRA (with a pitiful amount of money in it, but that's a story for another time) and we made a new one for HMH. Fast forward a year, and even though I'm not maxing mine out anymore to adjust for the cost of maternity leave and increased household expenses, we've still made our eight hundred bucks back many times over. The IRAs have also become a piece of Baby Heavy Metal's college plan.
At our final meeting for the year, which was also attended by then-two-month-old Baby, Matt made his way to the issue of life insurance. HMH already had a term policy through AAA and we both had life insurance through our jobs which would provide 1-2x our annual salary -- assuming we still had those jobs when perishing in an untimely manner. I didn't have any coverage outside work, and that unfortunately is what "gets" a lot of people. Changing jobs down the road would mean different coverage; a terminal illness could mean having to quit a job and therefore losing the coverage. Better to have something in place when we were comparatively healthy and younger than we'd ever be again... Than the dire alternative.
After getting some quotes and taking the medical exams, HMH stayed with his AAA policy and I got a 30-year term policy that costs a little more than I like. I guess my wild 20s had me answering "yes" to some of the exciting questions, but I'll try getting some more quotes in a year or two... In the meantime, my family is set up if I get hit by a bus or die of cancer. I know, #yikes. But if that came to pass, I'd be glad I paid a guy eight hundred bucks to tell me I needed better life insurance.
The final reason I'm glad HMH and I went to a financial planner is because it has increased my giving. When I got to the "charitable donations" line of that packet, I didn't know what to write... And if I was honest with myself, it probably wasn't much compared to some of other non-essential line items. I won't go too much further into it because a great philosopher once said, "when you give [...], do not let your left hand know what your right hand is doing." Plus, the amount isn't super-impressive -- just trust me that it's more than it was before! I guess I had to give a guy eight hundred bucks to make me realize that I didn't have to be so tightfisted. :p
So overall, I'm glad that HMH began our marriage with some professional financial advice. Not only will it pay off in the long run, but it also made us talk about household finances and develop a plan together.
Have you worked with a financial planner? How did this help (or not help) your situation?
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