By You are not the only one who wishes they had learnt some of life’s most important money lessons sooner. Even seasoned financial planners wish they had learnt this advice earlier in life.
From appreciating the potential of automation to realising that merely saving money wasn’t enough to achieve their goals, these nine industry professionals share the financial advice they would give their younger selves. If their ideas encourage you to go more into your own approach, you may utilise this free tool from our ad partner SmartAsset, which can connect you with a financial adviser, as well as resources such as NAPFA and the CFP Board.
“Saving alone is not enough,” says certified financial adviser Charles Sachs of Imperio Wealth Advisors.
“I wish I had realised sooner that saving alone isn’t enough. Like many others, I was taught to be disciplined about saving money from a young age, but it took years for me to realise that savings only get you halfway. The true tipping point is discovering how to put that money to work for you through careful investing.
Investing permits your money to compound over time, reducing the need for your own labour. When investing is done purposefully and with taxes in mind, it can significantly alter long-term outcomes.”
First, pay off debt as soon as possible. Second, never interrupt compound interest, advises Philip Gallant, managing partner of The Optimus Group.
“I wish I had known these two things sooner. First, get out of debt as quickly as possible. Despite all of the hype about saving large sums of money for retirement, the true objective is to reduce your recurrent expenses as quickly as possible. Not carrying debt is as important a retirement strategy as finding a good investment. When you retire, cash flow is crucial, as is maintaining a solid emergency fund.
Second, never disrupt compound interest. [Albert] Einstein named compound interest the eighth wonder of the world for a reason. It only improves the longer you leave it alone. There are numerous ways to generate revenue from financial products that do precisely that. Properly constructed life insurance plans are critical to having access to money and continuing to earn interest on the money borrowed from your policy.”
‘Accountability is important, but so is flexibility,’ says Preston D. Cherry, PhD, CFP, founder and wealth adviser at Concurrent Wealth Management.
“Much of today’s personal finance advice, particularly online, is filled with’shoulds.'” People wonder what they should be doing because comparison and one-size-fits-all advice might leave them feeling behind or filled with guilt.
However, life and money are not linear, and nobody loves being’shoulded’ on. Comparing your situation to someone else’s might erode confidence and lead to decisions that are inappropriate for your life. Flexibility is just as important as accountability. The most effective financial advice helps people connect their money with their lifestyle rather than forcing them to conform to a rigid financial script.”
Ryan Haiss, CFP at Flynn Zito Capital Management, explains how effective automation can be.
“Automating your finances takes emotion out of the process. A good example is a 401(k). Money arrives in your pay cheque without you having to determine when to invest, reducing the temptation to time the market or react to headlines.
When you invest consistently and automatically, compounding has time to perform the heavy lifting. Extending automation to savings, investing, and bill payments helps most people stay disciplined and avoid getting in their own way.”
‘Dedicate as much (if not more) time, energy, and attention to improving your income,’ advises CFP Robert Pagliarini of Pacifica Wealth Advisors, Inc.
“I believe that financial planning places too much emphasis on decreasing expenses, which is a disservice. I’m all for decreasing or eliminating superfluous expenses that do not improve my life, but I believe there is a much better potential to devote as much (if not more) time, energy, and focus to raising revenue. It’s more motivating and financially empowering. It’s a lesson I wish I had learnt much earlier.”
‘Personal finance is never truly about the money,’ explains CFP Akeiva Ellis of The Bemused.
“I wish I’d realised sooner that, while financial awareness and education are vital, personal finance is never just about money. Though I still had a lot to learn, not knowing was never the largest impediment to growth; doing was.
Real change began when I finally asked myself, ‘Why am I like this?’ in terms of money management and began deconstructing the buried ideas and myths I carried about money. Those often unexplored stories behave like a pushy backseat driver, affecting decisions without your knowledge. Once you fix the issue, the methods will stick.”
‘How to leverage and use debt to your advantage,’ says CFP Charles Weeks at Barrister.
“My parents believed that any debt was bad debt, which couldn’t be further from the truth. I wish I had known how to leverage debt and turn it to my benefit. Paying it off simply to get out of debt isn’t always the greatest plan. You must consider the cost of the debt, whether there are any tax advantages, and what rate our money could increase at if invested rather than being used to pay off obligations.
‘The compounded penalty of delaying,’ warns CFP Riley Saunders of Cassaday & Company.
“What is rarely discussed is the compounded penalty of waiting. Life experiences, like capital, yield long-term returns. Dividends that you can frequently share with another person or your family.
While the goal is not to abandon the discipline of saving, it is critical to recognise that a ‘core memory’ accumulated in your 20s or 30s can be just as useful as one acquired at 60. Spending on purpose from time to time is not a failure of your training; it is a recognition that your ability to enjoy specific times is a finite resource that will eventually disappear, regardless of your account balance.”
‘The budget is the foundation of being able to produce wealth,’ says CFP Lauryn Williams from Worth Winning.
“The first piece of financial advice I wish I had received sooner was that a budget is the cornerstone for creating wealth. If you don’t know what’s coming in and going out, how can you plan to build wealth, retire, or achieve any of your financial goals? Second, paying yourself first is essential for putting aside what you need.
A budget is essential for evaluating where you are with your savings. What is coming in and what is coming out? And the budget will determine what you can do because money is ultimately a tool for living the life you want. And, secondly, paying yourself first is an important piece of the puzzle.”
