The Best Financial Decision I Ever Made

by Angela Ozar

March 26, 2020

Personal Development

It cost $400. And no, it wasn’t a professional grade blender (although those are completely worth it, too!). It was a meeting with a financial advisor. Little did I know how critical it would prove to be. Quick “Why” Backstory: In a leap of faith, I quit my corporate job with all the bells and whistles to work for a non-profit. I was passionate about the work. I thought it was worth the risk and the sacrifice for the experience. At the time I was transitioning, I had to roll over my 401(k) and had no clue where to start. A mentor suggested I meet with this guy who just started his own financial firm. So, on his recommendation, I met with Brad to discuss my finances.

First Blush

Brad and I clicked right away. We had the same thoughts and ideas around money, and it was enough for me to trust him to help. He explained how I would roll over my investments to a platform he used. Along with that, he recommended I meet with him for a one-time financial planning meeting to go over:

my spending,
set up a budget, and
establish some long-term and short-term savings goals.

Normally, I would shy away from this sort of thing and say I was fine – that I didn’t need the help. But something made me think what the heck. What could it hurt?

Budgeting and So Much More…

Brad and I went over 3 months of my spending over Starbucks. He coded my purchases and put them in a budget measured against benchmarks. I learned I was spending the appropriate amount on housing and transportation and overspending on clothes and personal (aka beauty products). What came next, though, was worth the $400 and more. Brad suggested a safety net now because they non-profits could lose funding and it would be a good idea to have several months of living expenses set aside in the event I lost my job. I had never considered a financial “safety net” before. Honestly, I never thought I would need one. I agreed with him though; it seemed like a good idea. So for three years, I slowly put money away into a short-term fund I could easily access in the event I needed to. And then one day I needed to. I lost my job. I basically lived off my safety net funds for a year during a time of underemployment. That first meeting with a financial advisor turned out to be the best financial decision I’ve ever made.

Why You Need a Safety Net

“But Angela,” you might say, “my job is secure. We have plenty of funding.” OK, so why else would someone need a safety net besides job loss? And what qualifies as an emergency? Personally, I love what the character Rebecca Bloomwood in the Confessions of a Shopaholic book series qualifies as a “financial emergency” -a sale, obviously.

We’ve all had a few Rebecca moments – including myself! As tempting as a price drop on a flight to Ireland may be – it doesn’t qualify as an emergency. An emergency could present itself as unexpected medical expenses, car and home repairs, and a family death or illness. A safety net or emergency fund gives you peace of mind that you’ll be financially covered if you get in a car accident, or you have to take time off from work to care for an elderly parent. Finances are the last thing you want to think about in any unexpected bad news.

How to Do It

#1 Have a Financial Safety Net Save anywhere from 6 to 9 months of basic living expenses. I call this a bare bones budget, i.e. what you need to survive: mortgage/rent, utilities, groceries, fuel, etc. Savings vehicles:

Individual Retirement Account (IRA)
Certificate for Deposit (CDs)
High Yield Savings Account
Money Market Account

#2 Meet with a Financial Advisor or Coach Look for someone who:

Has your best interest in mind (fee-only fiduciary advisor)
Someone with a past success record
Someone you trust

#3 Utilize a Health Savings Account Did you know that women have higher health expenses than men (especially during reproductive years)? You can use HSAs to cover emergency medical expenses as well as any medical expenses in retirement.