Key Starter Financial Advice Items I Provide (to those who will listen).

Who Asks Me for Financial Advice:

My interest in personal finances leads me to many situations where people ask me to provide  financial advice and guidance to them, to their kids, their kid's friends and a host of other people looking for quick guidance on their finances. When I was younger I typically avoided offering advice in these areas. In the last few years however I realized that I should at least draft a simple list of road map steps that can show others where to start their own gains in personal finance. 

Why People Ask Me Advice:

What's interesting here is that I am a self taught investor, so I always remind people that my advice is basically guidance that must be expanded with their own additional learning. Legally speaking, I can't technically provide financial services, sell financial instruments, etc. Part of me thinks, "who would take financial advice from a non-credentialed finance person,." The other side of me remembers the very helpful conversations I've had with business people from all levels of the educational spectrum. Some of the best business advice I received came from people with less than a high school education. So I may have a slight bias in my opinion on the lack of value of the over-educated in the U.S. I'll save those thoughts for another post.

Making Financial Changes Compared to Career Changes:

What I find interesting about financial versus career discussions is the small amount of effort needed to make a positive direction into financial changes. Career changes require significant planning and potentially stressful changes to your daily life. Making simple, beginner personal financial changes can be easy and quick once you have the knowledge.

The Advice: 

From what I've seen, when people seek financial advice they often seek a quick answer and resolution with minimal effort on their part. The process of moving towards making better financial decisions requires people to learn about personal finance themselves. Yes, you can certainly hire your own financial adviser and pay them a portion of your net worth to make those decisions for you. This is the model that some people have followed for years, but it's never been my model. My advice starts with figuring out these key items before any changes are made, they are:

1- Assess your debt immediately:

You need to know exactly what your current finances look like. How much is your debt, is it growing, if so at what rate, etc? Adding up your debt can be painful, but without a recognition and total inventory of your debts and assets you will never get a good start in your financial journey.

Recommendations: Build spreadsheets, download Mint or my favorite Personal Capital to help you understand where your debt/assets are located. See my personal capital link below:

https://share.personalcapital.com/x/89GZJp%C2%A0

2- Dig Deep, Understand Your History and Relationship with Money. 

This step requires looking internally to understand how you developed your view of finances/money. What did you pickup from your parents, school, friends, community and religious leaders regarding your opinion on the value and purpose of money? How has the advice you've received worked for you thus far. Asking these questions will teach you a lot about yourself, your views and outcomes. I can tell you that most people need time to identify and process this information. So this step doesn't take place without a lot of effort- people will definitely need time to ponder this one.  

Recommendations: Have candid conversations with your spouse, your peers, your parents and anyone else who knows you well enough to figure out what money means to you. 

3- Start Building Your Own Knowledge and Team of Financial Peers:

Whether it's through key pillar blogs such as MrMoneyMustache, podcasts such at ChooseFI.com, local meetups with others who are seeking out a similar objective- you absolutely must both build out and insert yourself into a community of like minded individuals to learn about the finance space, the FIRE space, or whatever space you focus on to achieve positive results. Going at financial learning on your own simply doesn't make sense when there are a host of free resources available to you today. 

Recommendations: Look for meetups, listen to finance related podcasts, find your tribe.

4- Draft Up Your Investing Proxy Statement and Strategy:

Once you understand some of the principles of investing types and strategies, write down your own investing proxy statement. Similar to official proxy statements that the SEC requires of companies to provide to shareholders so they can make informed decisions about matters that will be brought up at an annual or special stockholder meeting, your proxy statement should be your guidepost for your family's investing.  In the draft I recommend outlying the why, where and how you plan to invest your money. These details should line up with your annual financial goals, such as, "I will automatically purchase VTSMX each month in my post tax account using X percentage of my quarterly profits from rental Y. Once I reach Z amount of investment gains, I will setup automated profit withdrawals and reinvest those gains into new business 1, etc."

Recommendations: Give thought into your investing risk tolerance and long term investment goals; For instance, how will investing X into a short term day trading account impact your overall investing strategy outlined in your proxy statement.

What Next:

Once you (i) recognize your debt, (ii) understand your own psychology and beliefs about money, and (iii) start building your own knowledge base and team of experts to assist you, and (iv) write down your own proxy statement, the upward path to improving your financial situation will start to take shape. I can tell you that the people who skip these initial steps will experience a much steeper climb out of the financial pit in which they currently reside. 

Note that I am not a financial or legal professional, nor am I licensed to sell securities, or any other financial instruments. Given this statement, I strongly recommend that you consider this blog as entertainment value. Although, I sincerely hope that I can motivate you to learn to build your own financial knowledge and wealth.

Financial Sombrero

Building Wealth Knowledge Every Day