The Four Most Important Pieces of Financial Advice You’ll Ever Receive

Many of you, I am sure, are like me in that you have lofty goals for your future. I want to travel the world, build my dream home, retire to a beach cottage on Cape Cod, amass a pack of ten dogs, and open my own Starbucks in the backyard. Okay, so maybe that last one is a stretch, and maybe having two dogs is a more realistic goal, but I’m not going to give up any of my other goals just because that one is unrealistic. 

The harsh reality is that, in many cases, achieving one’s goals necessitates more than simply crossing one’s fingers and hoping for the best; rather, it necessitates hard work, wise financial decisions, and meticulous planning. I’ll be the first to admit that on a Saturday afternoon, I can easily spend $200 at Target, and while I try to limit myself, it’s OK for me to do so every now and then. But I’ve come to the conclusion that in order to achieve my goals and position myself for a prosperous future, I need to start learning some basic financial concepts right away. 

I contacted a trusted advisor because I anticipated it would be a difficult task, and she gave me her best piece of advice for ensuring our future security. Continue reading to find out all of her best financial advice! 

You should begin saving right away 

The realization that one cannot amass wealth while simultaneously spending all of one’s money was the most difficult for me to accept. The unfortunate reality is that if you want to be wealthy in the future, you must start saving money now. Zoe believes that the sooner you can set aside 20% of your income, the better. 

Unfortunately, many people reach retirement age and discover that they are unable to maintain their standard of living because 1) they did not save enough money during their working years, and 2) their wealth is not distributed effectively (more on that later). 

Okay, that’s great. So, how do you go about doing so? Zoe provided some sound advice on the subject at hand. “Practice getting paid instead of getting paychecks,” she says as her first piece of advice. This means that we should always pay our bills first, rather than immediately after purchasing that new pair of Sam Edelman sandals or Lululemon leggings. Setting some costs higher than others is a critical step. 

Always pay your bills first before spending money on other things 

This is perfectly aligned with her next piece of advice, which is that you will need a budget. One of the many advantages of using a budget is the ability to visualize how much money you make, how much money you need for expenses (bills, savings, investments, etc.), and how much money you can allocate to “fun” spending. 

You can do this effectively with the help of a financial planner, but there are also excellent templates and tried-and-true apps available online that can help you understand your financial situation better. 

Last but not least, as cliche as it may sound, start spending your money wisely. Don’t get us wrong: we’re not saying you should never spend money on fun activities. Instead, when making large purchases, save your money where it makes the most sense. If you enjoy traveling as much as I do, you won’t wait until you’re sixty to embark on your next adventure. 

Whether you believe it or not, there is a correct way to travel at this time. Zoe recommends using a credit card that earns travel points, using the mobile app NerdWallet to compare different travel credit cards, and remembering that Tuesday afternoons are almost always the cheapest time to purchase airline tickets. This is the kind of straightforward cost-cutting method that will make all the difference in the long run. 

Create a Debt-Reduction Strategy 

Life, as we all know, can be a muddle, and every now and then, it can become even more muddled than it already was (thank you, 2020). If the pandemic taught us anything, it’s that we should always be prepared for the unexpected. You never know when something life-changing that could negatively impact your life will occur. It could be anything from being fired to receiving a devastating medical diagnosis (and your wallet). 

As a result, you should always have an emergency fund that you do not touch unless something very serious happens. This could start on a small scale, perhaps with a couple of hundred dollars. To begin with, the sum of $1,000 is a popular choice for many people. However, industry professionals recommend that you have an emergency fund equal to at least three months’ worth of your income saved up. This money should be kept separate from your regular savings account. This can be accomplished by transferring it to a different bank account or physically storing it somewhere safe (like the traditional method of hiding money under the mattress). 

You should begin investing immediately, both with and without the assistance of your employer

Taking advantage of your employer’s 401(k) plan is an excellent way to begin your career as an investor. To summarize, a 401k account is a savings and investment vehicle sponsored by employers that is specifically designed for retirement. Both the employee and the employer can contribute to the 401(k) account, and many employers will match the employee’s contribution. 

You should make sure to ask your employer about the following critical point: Do they match 401(k) contributions, and if so, how much do they match? Because the money in this account is deducted before taxes, you will receive more of it if you contribute the maximum amount that your employer will match whenever possible. 

You should put as much money as you can into a Roth IRA during the years of your life when you will earn less money. What does this mean for those of us who aren’t financial experts? In contrast to a traditional individual retirement account (IRA), which is funded by your employer, you are responsible for paying taxes on the money contributed to your Roth IRA. 

Because the money was not taxed when it was first put into the 401(k), it will be taxed when it is withdrawn from the account after retirement. Funds deposited into a Roth IRA, on the other hand, have the potential to be withdrawn tax-free during retirement (ergo, more money for the beach cottage down payment). 

It’s easy to convince ourselves that we don’t make enough money to start investing right now, and it’s even easier to convince ourselves that we can wait until later in life to start investing. However, the unvarnished truth is that investing is a process, and the sooner you throw your hat in the ring, the greater the long-term benefits you will reap. This is especially true if you begin investing at a young age. 

Investing sooner and in smaller amounts is preferable to investing later and in larger amounts

Because your employer is not involved in the management of your Roth IRA account, starting to invest without the protection that it provides can be quite nerve-racking. The best thing you can do for yourself is to find a financial advisor who can help you make additional investments in addition to those made by your employer and who can also help you create a financial plan. 

Good news: we don’t have to be geniuses who know everything, especially when it comes to stock market investing. We can enlist the help of someone who is familiar with the market’s complexities and will act as our right-hand man throughout the journey. Investing does not have to be a stressful experience. You simply need to know who among your contacts can be trusted. 

Find a trustworthy and reliable financial planner

I can speak from personal experience when I say that starting to work with my financial planner was a game changer in many ways for me. I was offered a 401(k) plan while working in corporate America, but I had no idea how to invest in it. Cooking is another of those fundamental life skills that we were never taught in high school. 

Zoe was able to maximize the funds in my 401k in order for me to get the best return on investment. This is something I could never have done on my own and demonstrates her expertise. She also helped me through the process of moving across the country (hello, taxes), changing jobs, and buying a new car. She has been a wealth of financial information for me, and it is wonderful to have someone on my side who can provide guidance in this area. 

As a result, I strongly advise everyone to consult with a financial planner. Where, however, can one be found? It’s a good idea to start by asking questions of those around you. You should ask the people who are already in your life if they can recommend a financial advisor. Using social media as a resource to find a good advisor is also very beneficial. 

Finding someone in whom you can put your trust when starting a working relationship with a financial advisor is the single most important step. That does sound incredible, but now the question arises: how can I tell who I can trust? When you first begin talking with potential advisors, look for one who will create a long-term financial plan for you rather than one who simply wants to invest your money for the sake of investing. In the same breath, look for someone who will create your financial plan while keeping your long-term financial goals in mind. Remember that your life, money, and future are all on the line here!