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4 things I learned from my financial adviser

Kristin McGrath

June 1, 2012

As I mentioned two blogs ago, I made an appointment with a financial adviser. Because I had no money plan beyond paying the next month’s rent, I decided I needed someone to force me to think a few years down the road.

After my first meeting, I’m happy with my decision. Sure, some of my adviser’s questions (Do you ever want to buy a house? Get married?) made me squirm a bit, but they were good to think about, if not answer directly. For example, when I claimed that my 7-year-old car was definitely going to last “at least five more years, right?” I realized how little I’d been planning for big purchases that might be just a few years down the road.

At the end of our meeting, my adviser gave me some homework, some goals and some things to think about. Since this advice was meant for me and only me (based on my current situation and goals), it will not apply to everyone. Yet I learned a lot from it, and it might give you some questions to ask your own financial adviser. Here are four things I learned:

  • I need much more in liquid savings than I thought.
    That savings account I’ve proudly mentioned on this blog? I need to ramp that up. My adviser asked me how much I thought I needed in easily accessible cash. I made an estimate based on my living expenses. Turns out, I should be thinking in terms of income, not expenses. My new (lofty) goal is to eventually have at least six months of income set aside in a savings account.
  • My money is stagnating in my checking account.
    My paychecks get deposited into my checking account and tend to chill there for a while — earning no interest and doing me no good. My homework assignment is to phone my bank and see if I can find a better home for my paychecks — a savings account that earns more interest than the one I have — and to inquire about one-year certificate of deposits (CDs). If I can manage to put enough of my money into these places, even a tiny amount of interest will go a long way. As for my checking account? My adviser recommended whittling it down to enough for living expenses, plus a little extra. Good thing, I’m working on my budgeting skills.
  • I need to put money where I can’t touch it.
    While I do need a nice cushion of liquid cash, I need another kind of stash as well — for money that I won’t touch for a while. Some of it will go into a brokerage account that I must promise not to touch in the next five years. We’re talking potential house money, here — not dinners-out money or vacation money. In addition, I need to beef up my 401(k) contribution and max out my Roth IRA.
  • I should consider a rewards credit card.
    I’m pretty low-maintenance as far as credit cards go. I have a no-bells-and-whistles credit card that I pay off every month. But I’m not getting rewarded for that good behavior (except with a good credit rating, of course). Since I’m not carrying a balance, it might be a good idea to get a rewards card that will pay me for my good habits.

It might take me a while to check all these goals off my list, and it will require a bit more discipline than I’ve had in the past (setting more money aside means spending less on “fun” stuff). Yet it’s nice to have someone to check in with.

With financial planning in mind, here are the best money blog posts of the week:

DailyWorth lists a few things couples could afford if they don’t splurge on an engagement ring.

Girls Just Wanna Have Funds provides a “cheat sheet” for retirement saving options.

Budgets Are Sexy illustrates the importance of having an emergency fund when you own a house.

The Sun’s Financial Diary explains how to stick to your budget while grocery shopping with a hungry kid.

Money Crush explains how money can bring your joy rather than stress.

David from My Two Dollars describes how he changed his money philosophy.