Pro tips Q&A with certified financial planner Jen Grant
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It’s been a stressful few days in America. No matter your feelings on the eventual outcome of the election, it’s important to stay level-headed with your finances. This week we spoke with Jen Grant, a certified financial planner and financial advisor at Perryman Financial Advisory in Dallas, Texas, on how to approach your finances in the coming weeks, months and in general (it all involves having a plan).
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This interview has been lightly edited for style and clarity.
If you didn't come into this election confident that you had a plan that was going to be flexible enough to deal with either outcome, then that should be your first priority. Get a plan, get your house in order and find a financial planner. If you've got something that's flexible and you've thought it through, then no matter what happens, you're good either way. Now you just have to deal with the emotional part of it.
I do think there's going to be a lot of volatility going into the end of the year because we didn’t have a clear-cut winner from the get-go. So if you’ve been sitting on the sidelines with cash, wait for an opportunity and slowly get back into the market. It's the people that try to time the market, who get in and get out based on what they think is going to happen, that underperform in general.
I definitely fall into the proactive camp! Money will always find a home, especially if you don’t pick a home for it. You want your money to help you reach your goals. If you don’t have a plan for how that is going to happen, the goals are not likely to be reached. So sit down and ask yourself what you want. Do you want to be debt-free? Do you want to buy a house in five years? Do you want to be able to take a vacation next year? Then figure out how much you need and how much you can put towards that goal each month or each paycheck.
The biggest and most common financial mistake I see people make is to live on their whole income. If all of your income is funding your lifestyle, you have two problems: 1. You are not prepared for the unexpected expenses which hit us all. 2. You will never be able to stop working. I see people with six-figure incomes but very little savings. If you want to retire someday and live a six-figure lifestyle, you have to have investment assets to generate that income and to build those investment assets, you have to save.
Start the saving habit early. Always be putting something aside for the “turbo-saving years.” You need a handful of years where you are saving a large portion of your income. Maybe this is when you are young, single and earned a great job. Before you have a house and commitments, sock away money in your 401(k). Or maybe this is when you finally have your kids through college and your house is paid off. Then pretend you are still making that mortgage payment or tuition payment and put it into your retirement savings. Just know there will need to be some years where you save big. Talk to your financial planner to make sure you know when your turbo-savings years will be.
The thing I am most proud of is getting through undergrad without any debt. I got a ¾ scholarship, worked two jobs and had help from my parents. I went on to grad school and got a teaching and research assistant position that covered my tuition and a stipend for living expenses. My greatest wish is that I can convince my kids to focus on picking a college that we can afford so that they can start their adult life without debt.
The worst financial advice came from a mortgage broker in the early 2000’s. She strongly suggested that we get an adjustable rate mortgage with a balloon payment in seven years. She said, you probably won’t be in that house in seven years and if you are, the bank will be happy to refinance it. Even now in my head, I hear the sing-song-y voice...with the “it will be fun they said”tune saying “the bank will be happy to refinance it.”
In reality, we had a $170k balloon payment due in the middle of the 2008 financial crisis. There were several months of nail biting with my three small children as my husband and I held onto our jobs and waited to see if we could find a bank that would refinance us.
There are certain things that you will do in your life only one or two times, like buy a house, sell a business or put a child through college. These are the times you look to an expert to help and maybe more importantly get a second opinion. Having someone you know and trust, who knows you and your situation, can be a valuable resource.
I read an article when I was going through my certified financial planner coursework on being a good financial planner and one of the main points was that financial planners need financial planners. Even though you have the technical skills to do it yourself, you need an unbiased expert to make sure you are accountable to yourself and that if you have a partner, that they also get heard. I am grateful to my financial advisor who helps me see my blind spots and gives me and my husband a time without distraction to focus on our personal financial future.
Image: Nastia Kobzarenko
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