Figure 17 Securing your finances
Photo: Image Source/iStock by Getty Images
A lot of kids in the city grew up pitching pennies or pitching quarters. Have you heard of that? As a kid we would collect any change we could. On the weekends we would meet up to pitch pennies, or quarters or nickels or dimes, whatever we could get our hands on. The point of the game was to pitch your coin from behind a designated line. The line was either a score in the sidewalk or made with a few pebbles that we found. We would try to get the coin closest to the wall without hitting the wall. The person who had the closest coin got to keep all the change. There was a gamble involved, but in the world of making money there usually is. It all comes down to the same thing, you make money or you lose money, but remember that you always have the option not to play. You can just work and save and instead of gambling and taking financial risk, you can put all of those coins in your piggy bank.
We just read about Trina and her father, Fred. Fred worked hard his whole life as a small business owner. He had a nice income flowing in but he could never seem to get ahead. Like a lot of folks, he spent most of his younger years treading water financially. Unfortunately, by the time he was into his retirement age he was financially underwater. Now, if Fred sat down with a financial advisor early on he may have been able to establish some discipline in his spending and saving habits and set himself up for his financial future. Back in the day, the world of financial advisors wasn’t quite a thing. Actually, the first graduating class of the College of Financial Planning happened in 1973. Between then and 1982 there was a double recession in our country. It wasn’t until the mid-1980s that financial planning became a thing. In 1987, there were only 20 colleges that offered programs for registered financial planners. In 2005, that number increased to 190 colleges offering a variety of 300 programs for registered planners. The point is, it took time this field to grow and bring awareness to the importance of planning for your future. Many of our parents and grandparents didn’t have this opportunity or know how. The upside to being an employee for a larger corporation is that they set things up for you. Many companies provide things like a 401K and different retirement and savings plans. As a self-employed business owner, that is all on you to do for yourself. There is no handholding involved. So you must take the wheel, and drive yourself to find the right financial advisor to work with who will help you set realistic goals for your future.
Go to Thinkadvisor.com and look up the article written on December 1, 2005 by Kate McBride. It is titled, “The History of Financial Planning.” It provides a thorough summary on how financial planning came to be and all of the beginning struggles that had to be worked through. By understanding the history of a specific topic or idea we are able to gain a better perspective all around.
What exactly is a financial advisor? It is pretty self-explanatory. A financial advisor is someone who advises you on how to improve and secure your finances. A financial advisor will help to map out and create strategies to increase financial wealth all while eliminating risk. The goal is to basically create a game plan to establish long-term financial wealth. It also allows the opportunity for an individual to pay down their debt if need by calculating a formulated plan.
Often the idea of having a financial advisor or a wealth manager is associated with being rich or wealthy. Do not be deterred or intimated by that. Even if you do not have a lot of money to put away, it is still a smart idea to consult with a professional and plan for your future. It will be here before you know it.
Listen, in all reality most financial advisors want the clients who have a lot of money to put up. The more money you make, the more it affects their income in a positive way, but there are plenty of financial advisors who help people from all walks of life. Talk to your friends and family members to see who they work with. Word of mouth is always a great resource. Then do your own homework and check out their background. It is always a good idea to read reviews, do professional background checks, and follow your gut. You are trusting this person with your personal information and your financial life.
Now, financial advisors deal with things such as stocks, mutual funds, and different types of savings options. There is a level of risk involved. Some people look at it as legal gambling when you get into the stock market. It very well may be, but that doesn’t mean that you have to throw the dice. There are much safer options. All of your options will be presented and discussed during the consultation with a financial planner. Again, these are all things that you should do your homework on ahead of time and after the fact, so that you have an educated understanding of your options. Suck up all of the information that you possibly can.
In the story of Trina and Fred, Trina presented her oldest sibling the opportunity to take part in helping their father out of his debt. She was in a very good financial position at that point in her life. She was also very good at saving and had a great financial investment plan set up for herself. She told Trina that she did not want to be involved in helping their father out of his debt. She made it very clear. Fred didn’t ask Trina because he knew that she would not help him financially. He would always joke about how frugal his eldest child was saying things like “She still has her lunch money from middle school.” Trina did not bother to ask the other siblings because they were in no financial position to help and often had to take or borrow money from their father to cover their own financial hardships. The fact that he would borrow or take money from Trina and give or lend money to his other kids did not help with the family dynamic.
Fred’s lack of financial planning had a long-term effect on not just him, but his family and his business. Unfortunately, when he arrived at retirement age he wasn’t prepared. This ended up with him living a retirement lifestyle that he wouldn’t have preferred if he had planned differently.
1. Have you ever been exposed to the concept of financial planning? If so who do you have to thank for showing you the way?
2. Have you ever gambled? If so, did you like it? Why/Why not?
3. If you have not started thinking about saving for your future, at what age do you plan on doing so?
4. Would you be willing to sacrifice a couple of fun nights out to put money into your savings for your retirement? Why/Why not?
Journal
What did you take from this chapter?