I know. You were totally broke and you didn't think contributing to a 401K should be at the top of your list. Especially in recent years, when the 401K's of the world were losing money, and the credit cards of the world were sticking you with ever increasing interest rates and penalties.
And you were right.
I've only just realized though, the next step. Once you ARE consumer debt free, you will never get ahead if you put your savings into your mattress, your closet or even your bank. Even my online savings account is now making a whooping 1% interest rate.
Recently, I decided to look into "financial planning," which sounds to me like something well beyond my limited means and something I picture Warren Buffet worrying about, not me.
This was a pretty scary proposition. I mean, I don't even qualify for a credit card from Target because of my bankruptcy....how could I possibly think a financial planner would care about me?
Coming from a journalism background, I decided to treat it like a research topic, and not take it personally. I figured financial planners probably offer initial consultations free-of-charge (they do.), and so even if I couldn't afford it, I might learn something.
Well, wasn't I shocked?
And wasn't I wishing I had gone to a financial planner several years ago?
I can now proudly say I am fully funding a ROTH IRA. I can now tell you with peace-of-mind that my old 401K from that job I haven't worked at in seven years is now transferred and back under my control. Oh, and is gaining, at least a little bit, instead of just paying out maintenance fees.
Most importantly, I can tell you that the cost of a financial planner is well within my means. Well within your means.
Different planners get paid in different methods. The planner I chose gets paid....lets say by my ROTH IRA. The firm that I send MY money to takes out a straight percentage, and a portion of THAT goes back to my planner. So, I never cut a check directly to my planner, and the percentage of my money that is going to fees is actually LESS then it is thru my 401K.
Some people would see that as a conflict of interest ("of course this person told you you need an investment account...that's how he gets paid!"). If you're like that, then there are planners who you DO pay directly, as an hourly rate or a yearly rate, etc.
An initial meeting with a planner takes about 30 minutes, and that alone is enough to draw you a clear picture of where you are. You bring with you to that meeting your budget and spending/saving habits, your fixed & variable expenses. Bring a pay stub so there's a clear idea of your pay, your taxes, your withholdings, etc. Then you let a professional, an outsider, give you advice. Things like "Why are you putting this much into a savings account that's making .01% and NOT paying your car off faster, when you're paying them 4.6%?!?"
Since that first meeting is free, and fairly quick, you can meet with 2 or 3 planners to find one you think meets your needs. Either way, I definitely recommend it.
For me, the process was fairly easy. I don't have children, so I am not worried about future college funds or whatnot, and I could be pretty selfish. Sock it all into retirement and retire to Fiji! :)
Well, a girl can dream, anyway.
Realizing it's time to think about getting ahead instead of getting by? Check out the many, many resources available through the Financial Planning Association.
And just because it's the government-sponsored site that my planner recommended to me, you can also check out www.choosetosave.org.
No comments:
Post a Comment