10 Reasons You Need a CFP® More Than Your Parents Do
A 10 minute read that will change the way you think about financial planning as a 20, 30, or 40 something.
1. Frequent Life Changes
For people in their 20's, 30's & 40's, life changes occur far more frequently compared to those in their 50's and up. A long term relationship with a CFP® will help you navigate these big decisions and adjust your financial plan along the way. Making smart money moves in your younger years will set you up for years to come.
2. The World Has Changed
“My parents winged it and they ended up ok”
Your parents grew up in a world where you stay with one company your entire career then retire with a pension and/or fully funded social security. Things have changed.
The Challenge: Today, we live longer, healthcare costs are skyrocketing, large cuts to social security are likely, pensions are rare, & your options are far more complicated. In short, the baby boomer generation had legitimate safety nets our generation won't have the same access to. Today, the burden is on us as young people to ensure a secure future for ourselves.
The Opportunity: Time, Technology, & Legitimate Advice.
Time is the ultimate scarce resource and we as young people have it, but it must be leveraged, not squandered.
Technology has made saving, investing, and getting financially organized less difficult. By itself though, it is no substitute for a holistic financial plan.
Legitimate advice is readily available these days! Your parents grew up working with stockbrokers often more focused on commission checks than your parents wellbeing (ever seen Wolf of Wall Street?). Today, you can choose to work with a CFP® professional who is held to a "Fiduciary Standard" (i.e. legally obligated to put your interests first).
3. Time: Compounding Self Awareness
“Personal Finance is 80% behavior & only 20% head knowledge”
Understanding your money mindset & financial behaviors earlier in life will pay compounding returns over your lifetime that will likely far exceed chasing that home run investment. People gravitate towards the latter for many unfortunate reasons. Poor financial behavior is easier to ignore than it is to own or confront. Behind this door however lies the greatest investment you can make, an investment in yourself. Improving financial habits can be tough, yet the hardest battles bring the greatest rewards.
By the way, ever heard someone older say: "If I did/knew ____ when I was your age, I would have done/made/experienced _____ by now!"
Well, let's flip the script. Working with a CFP® will help you learn your money mindset, own your financial habits, and get advice for ways to improve (now not later). Behavior change is tough by yourself, leaning on an objective professional to guide the process will provide compounding personal and financial benefits that last a lifetime.
4. Time: Compounding Interest
“Compounding interest is the 8th wonder of the world. He who understands it, earns it; he who doesn’t, pays it”
As a young person, take advantage of this precious window of time you have.
Working with a CFP® will help you get prudently invested now, not later. We help you create a savings plan that balances how much to spend today vs. save & invest for tomorrow. Our goal is to ensure every available dollar is working for you, so you're set up for success (easier said than done).
5. Improved Romantic Relationships
“41% of Gen X’ers ended their marriage due to disagreements about money”
The importance of this topic cannot be understated as it goes way deeper than dollars & cents.
Married? Working with a CFP® provides an opportunity to understand your spouse on a deeper level. Money talk can be awkward. Through guided conversations & powerful questions, you'll both feel clearer about your spouse's mindset around money (values, habits, decision making, attitude, life vision, & what "acceptable" tradeoffs are to them). Better understand not just "how" they think about money, but also "why" they think that way. This is a huge opportunity to navigate gaps between you, explore compromise, and leave feeling a better understanding of your marriage.
Not yet married? Developing financial self awareness will allow you to more effectively communicate your needs, preferences, & values, in current or future relationships. Be sure to bridge any money mindset gaps before popping the question so you feel more secure in which ever life partner you choose.
6. Spend with Less Worry
“A budget isn’t about restricting what you can spend. It gives you permission to spend without guilt or regret.”
Ever taken a trip, made a purchase, or bought a home, and the excitement around it was lessened due to worrying how this might affect your ability to save or spend in other areas? Well, it's a crummy feeling. You work hard for your money and worrying can impact your ability to fully enjoy it when you do decide to treat yourself.
Working with a CFP® helps you determine how much you should responsibly be saving towards a house, car, retirement, etc, then automate the savings so it's automatic. Any remaining money can be spent with less worry, knowing your savings are accounted for and the rest is spent responsibly. Spend your money on the things you love and don't feel guilty doing it!
My purpose as an adviser is to make sure you're covered for tomorrow so you can experience more of what brings you wonder & joy today!
7. Live Life Intentionally
“Excellence is never an accident. It is always the result of high intention, sincere effort, and intelligent execution... choice, not chance, determines your destiny”
Too often we let life take us on a ride rather then getting in the driver's seat and deciding where to go. Why? Living intentionally isn't easy, it takes decisiveness, sacrifice, action, confidence, & commitment. You'll struggle to bring dreams to reality without deciding the steps you need to take to get there, then intentionally choosing to act on them over time. I'm sure we all can think of our career, a hobby, a relationship, that we've done well in because we took intentional consistent steps to improve. Now, consider the areas you've been less intentional and reflect on where it's taken you.
Many young people thrive in their career yet lack intentional action around their finances or other life goals that are more complex or less exciting. Working with a CFP® will help you have the confidence to decide on a path, take committed action, and do so with the guidance of an adviser and the accountability of a coach, all in one.
8. Make Big Decisions Easier
“Long term thinking and planning enhances short term decision making”
In our 20's, 30's, & 40's, we face a staggering number of major life decisions around changing careers, buying a house, having a child (or several),starting a business, etc. Ever see something you want (dream home, car, or a trip you badly want to take) then think... "I just don't know if I could afford it". So, you stuff it in the back of your mind because the idea of saying yes to that one thing stresses you out too much to even think about. Denying yourself can then lead to self doubt, less self worth, and other negative feelings later. Fears around making financial decisions are strong, they stem from uncertainty, you're not sure if/how saying "yes" to what you want today will bite you in the ass later.
Conversely, perhaps you err on the side of saying "yes" a little too easily.
The common denominator here is uncertainty, it's in every decision. Working with a CFP® won't remove that, but it will reduce it. We help you understand the financial tradeoffs of each decision (if I do X, how will it impact Y?). By helping you run the numbers and consider the impacts, we empower you to dodge major pitfalls and make informed decisions you feel confident in.
Where possible, I help clients focus on "how" you can afford it, not "if".
9. Financial Planning IS Self Care
“Man sacrifices his health in order to make money. Then he sacrifices his money to recuperate his health. And then he is so anxious about the future that he does not enjoy the present; the result being that he does not live in the present, or the future; he lives as if he is never going to die, and then dies having never really lived”
Does the truth in that quote above give you chills? Me too. Money is a tool that can propel you to new heights or be a shackle at your feet, it's all how you decide to use it.
Perhaps you're not paycheck to paycheck, but many Americans live in a middle ground where they're comfortable (money isn't a shackle) but they're not fully using it as a tool to propel them to new heights either. Bad diet and no exercise are a recipe for disaster, so is not planning your life & finances intentionally.
On the left: See Maslow's Hierarchy of human needs. Working with a CFP® can help you feel more secure in the two most important bottom layers and create space to explore what the top three layers mean to you. Our goal is to focus on you more holistically than your average "investment guy" financial planner. We create space to put your needs first when everyday life makes it too difficult to do so.
10. Information Overload
“A wealth of information creates a poverty of attention”
The internet is an incredible tool, something our parents generation never could have dreamed of growing up.
However, it can do more harm than good if not used in the right way.
Ever done a quick google search and an hour later you've done everything but the one thing you set out to do? Or you need the answer to a question and 10 websites later are more confused than when you started? The internet is great for a lot of things but if you're wanting to plan your financial future, do you want to leave that to a bunch of shoe stringed google articles or a professional? You could build your own house by watching youtube videos, or you could hire a professional contractor who will do it quicker, better, and cheaper (if you value the cost of your time).
For those who lack the time, knowledge, or desire to navigate this sea of information (& noise) to manage their own finances, hiring a CFP® takes that burden off your plate. Let us cut out the noise and communicate only what you need to know (& do) so you can start taking action now. Save your precious time for doing what you do best!
Conclusion
“A good plan today is better than a perfect plan tomorrow”
In short, we all need financial planning in some capacity, but you as a 20, 30, or 40 something have far more to gain by working with a CFP® now, not later. This is the reason why Wonder Wealth focuses on younger clients, so we can make a larger impact. You have so much to gain starting earlier than your parents did (by all means, ask their opinion). Working with a CFP® will help you enjoy your money with less worry today, move you towards an intentional life vision going forward, and end up with more financial security/options tomorrow. Gain awareness about yourself and your partner along the way (life vision, priorities, money habits, and more) while avoiding common financial pitfalls with the guidance of an experienced professional. Planning is so much more than just focusing on a "far off retirement", it's a path to a better life now as well. The earlier you invest in yourself, the better off you'll be.
Knowledge ≠ Power.... Knowledge + Action = Power
At Wonder Wealth, I help my clients do both. Hit the “Schedule a Free Intro Call” button below to book a time with me and learn more.
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Jonathan Grannick, CFP®
jonathan@wonderwealthfp.com
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Sources:
Section 1: Photo by Michael Kitces at Nerd's Eye View
Section 3: Photo by Toa Heftiba
Section 5: Photo by Louise Burton. Quote Source.
Section 7: Photo by jeshoots.com
San Diego Financial Advisor | Fee-only Fiduciary
Disclosure:
None of the information provided is intended as investment, tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement, of any company, security, fund, or other securities or non-securities offering. The information should not be relied upon for purposes of transacting securities or other investments. Your use of the information is at your sole risk. The content is provided ‘as is’ and without warranties, either expressed or implied. Wonder Wealth, LLC does not promise or guarantee any income or particular result from your use of the information contained herein.