My First Financial Advisor
October 19, 2009 4 Comments
My mother passed away over 10 years ago. I was 19 at the time. She had a $100K life insurance policy. And when she died $40k went to me, $40k went to my brother, and $20k to my stepfather. The stipulation in the money was that it would be kept under the guidance of my step-father until I graduate from college or turned 25, whichever happened first.
My stepfather kept the money for us in a savings account. And as I needed some money for expenses at college, he gave it to me. My brother spent quite a bit more of his on college expenses because he didn’t have the full tuition scholarship that I had.
And when I graduated college the first order of duty was meeting with our family financial advisor to switch all of the money into my name. I put it all into Goldman Sachs Mutual Funds. Where it has been for the last 10 years, depreciating and having me remove money from it to pay down debt, afford my way of life, ect.
When I met with the financial advisor I already had my first credit card and a balance of about $2,000 on it.
I wanted to be financially responsible so I asked him: What should I do to be financially responsible? What are the steps?
Here is what he told me:
Step 1: Pay off all debt
Step 2: Save up 3 months of your salary
Step 3: Come back and we’ll set you up with your investment opportunities
It has been 8 years since I met with our family financial advisor. I’m still working on Step 1. Paying off the debt. Granted, I’ve since decided that a single-prong attempt at Step 1, followed by Step 2, followed by Step 3 isn’t the best course.
Which is why I’m savings (a little), while investing (hardly at all), while paying down the debt (currently 38% of my income).
I feel a little guilty that I’ve known since I was 21 (I’m now 29) the path to follow, but I didn’t start SERIOUSLY going along this path until the past year. It is a much longer journey now than it would have been if I had just paid of my $2,000 debt as a 21 year old. Hopefully before I turn 31 I’ll be able to meet up with my financial advisor and plan out the next step. Having paid off the debt, saved 3 months of expenses, and be ready to start seriously investing my money.