I'd Never Met With a Financial Planner Before-Here's What I Learned

I'd Never Met With a Financial Planner Before-Here's What I Learned

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When I set my resolutions in January, taking control of my finances and being smart about the way I spend and save topped the list-but here we are in December, and I've hardly taken any steps to get there. As 2018 approaches, I decided to finally quit procrastinating and take the first, albeit very delayed, step to meet with a financial planner.

My case is hardly unique: A new study by Fidelity Investments found that single women are less likely to consider themselves knowledgeable about money compared to men, and only 28% have an actual financial plan. Given I'm just about to turn 28, hope to buy a house in the next five years, and want to put an end to financial fights with my S.O., this meeting was long overdue.

Here are the most valuable lessons I learned from chatting with Jenn Imbeault, CFP, vice president of Fidelity Investments Shrewsbury Investor Center. After just one meeting, my financial anxiety dissipated, and I feel more control of my future. As it turns out, it wasn't so scary after all.

Brooke Testoni

Plan for Upcoming Milestones

The first thing Imbeault asked about were the milestones in my future: Did I hope to get married, buy a house, or make any other significant changes that might impact my finances? This helps create a map for the future so you can understand your big-picture needs and plan accordingly.

"I like to write down what it is I want to accomplish, then prioritize them on a timeline," she explains. "What's coming next in my life? If it's marriage, how do I pay for that? If I want to buy a house one day, what does that involve?" She recommends going further than simply acknowledging these milestones-it's important to create a clear picture and, in my case, talk openly to my S.O. to make sure we're on the same page. "I write details under each priority so I can visualize what I need to do. So, if you think you'll need to fund a wedding in the near future, have an open conversation with your partner about what that looks like. How much are you willing to spend? What's it going to take to get there?"

It might seem daunting, but it's an important conversation if you want to feel in control of your financial future. "The more detailed you can be in your priorities, the more visual it becomes, and the more likely your plan will come to fruition," she says, noting that this method helped her buy a house. "I knew where I wanted to live and in what kind of house, and then I did the math. It was about two years in the making, but I'm not kidding you, writing things down really helped."

Involve Your S.O. in the Discussion

The American Psychological Association found that money is the number one cause of stress in relationships, so talking to a financial planner shouldn't be a solo venture. "I think it's critical to have the two of you in a meeting," Imbeault told me when I mentioned that my boyfriend and I have different saving and spending habits. "If this is going to be about the two of you moving forward, then financial planning needs to be joint. Not each of you doing your own thing."

A typical session with a couple isn't as intimidating as it sounds. "I will ask you about your priorities, and then I will ask your partner the same question so we can come to a middle ground," she explains. "It's important for both of you to hear each other's perspective. Then you have a third person to mediate."

Align Your Accounts With Your Goals

Apparently, your bank accounts should each have a specific purpose and mirror your goals. "This helps keep your financial priorities separate," she explains. "If you have a joint checking that's used for emergency funds, savings, and to pay bills, it's easy to lose track." Instead, she recommends having at least three accounts tailored to a purpose:

1. Everyday Checking Account: Keep a checking account to pay for monthly ins and outs like bills and rent. According to Fidelity's 50/15/5 rule, this will likely be about 50% of your income.

2. Short-Term Savings Account or Time Deposit: A certificate of deposit is similar to a savings account, but money accrues interest over a fixed term (typically between one month to five years). "It's safe money," she explains. If you don't withdraw the money until the fixed term is complete, you gain any interest it earns during that time.

3. Long-Term Brokerage Account: "For something with a longer time horizon like three to five years, it's best to work with a planner on a brokerage account," she recommends. "That's for investments where you have the time to ride the ebbs and flows of the market."

Learn the Basics of Your 401(k)

Perhaps the most embarrassing insight to come from my chat with Imbeault was that I knew absolutely nothing about my company's 401(k) plan. Her first instruction? "As soon as we get off the phone, email HR," she says. "Find out where the 401(k) is, and then log into the account and get started. If they're giving you free money, take it, even if it's a small percentage. It's money that will contribute to your future lifestyle that you didn't have to actually fund-you'd be crazy not to." Also in the dark about your company's 401(k)? These are the questions she recommends asking:

  • Who is the company's 401(k) provider?
  • What funds can they offer?
  • Does the company match contributions?
  • Where can I find additional tools and information to learn more?

Schedule an Annual Money Meeting

Once you've met with a planner, set a reoccurring annual reminder to do quick pulse-check. "I recommend doing a formal review once a year to ask where were we last year, and where are we today? Has anything changed? What's going well, and what needs to be addressed?" she says. "We don't always make changes, but it's a good guidepost. Let's catch the things that need to be adjusted sooner rather than later."

If you're hesitant about the cost of meeting with a financial planner or that you don't have enough money to invest, know that it's free at Fidelity and you're not locked in. "There's no cost associated with having a planning conversation. My typical first meeting is typically about an hour, and we talk on the phone beforehand to find out what's on your mind and what you want to accomplish," she explains. If you choose to have a planner manage your money, there's a cost for that service on a case-by-case basis. "It can be as low as .35% for the money invested in a Fidelity Go online account to 1.7% for a managed account."

Whether you decide to go ahead and invest your money is up to you, but after just one phone call with Jenn Imbeault, I feel like a huge weight has lifted. With a new year ahead, it's one less thing I have to stress about.

Next up, a beginner's guide to building a budget.

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