I thought it was a waste of time to meet with a financial planner when I was 17, but I've lived by 3 lessons ever since
- When I was 17, my dad had me sit down with his financial planner, Jennifer, for a consultation.
- I couldn't see the point, since I didn't have much money or any investments. But 10 years down the line, I'm so glad I had that conversation.
- Jennifer helped me understand compound interest, and showed me what I needed to do to graduate college debt-free (which I did).
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When I was a senior in high school, my dad came home one day and told me he had set up a consultation for me with Jennifer, his financial planner. When I asked "Why?" he explained that she offered free one-time consultations to the children of her clients.
But my question was still ... "Why?"
I was only working part-time, I hadn't even started college yet, and I had very little money to invest. Why would I, of all people, need to sit down with a financial planner?
But, a little over a decade later, I'm so thankful that my dad had the forethought to set up that meeting. It ended up having a huge impact on the financial decisions I made throughout young adulthood.
Looking back, I recognize that teenagers and college students are one of several groups of people that could definitely benefit from seeing a financial planner.
What I learned from sitting down with a CFP at 17
Let me explain what I learned from my session with Jennifer and how it shaped my financial future.
1. Budgeting is important at every stage of life
One of the first things Jennifer asked me to do was write down my estimated monthly income and expenses. I have to admit that, up until that moment, I had never done that before.
Honestly, I thought budgeting was only for people who were in the middle of their careers and had "adult" obligations like car loans and mortgages. But Jennifer explained that as long as I had income and expenses, I should be laying out a monthly budget.
She explained that a budget may not seem important now, but it would be vital once I began college. If I wanted to graduate debt-free (which I had told her was one of my goals), I would need to get serious about tracking how my money was being spent.
To prove her point, she asked me to estimate what I expected my college costs to be. Then, we subtracted that amount from my monthly income.
There wasn't much leftover.
Jennifer helped me realize that if I wanted to avoid student debt, I especially needed to cut back on entertainment and food. Honestly, Jennifer's advice was a hard pill to swallow. But good financial planners, like Jennifer, will give you the advice you need to hear rather than what you want to hear.
Thankfully, I took her advice to heart and began to reign in my spending. And, four years later, I graduated from college debt-free.
2. It's never too early to think about retirement
Next, Jennifer gave me a serious lesson into the power of compound interest. She asked me if I would like to retire a millionaire. That sounded pretty good to me, so I said "Sure!"
She said, "OK, let's imagine that you start saving for your retirement at age 20, with a starting investment of $1,000. Take a look at how much money you'll need to save each month in order to retire at age 65 with $1 million."
I remember being shocked at how small the number was (less than $300). I said, "Really! How is that possible!"
Jennifer explained to me that if I chose to invest while I was young, I would be able to take full advantage of compound interest. Then she said, "But let's imagine that you wait to start investing until you're 30 years old. In that case, here's how much you'll need to invest if you want to retire a millionaire."
The number was almost exactly double. I was blown away. By beginning my investment journey only 10 years later, it would make it twice as hard (in terms of monthly savings) to reach my goals. Jennifer also helped me see the impact of taxes on my investments and why I needed to consider opening tax-sheltered retirement accounts.
Jennifer's investment lesson had a huge impact on my life. Less than a year later, I opened a Roth IRA and invested my first $1,000. And I've been investing a little each month ever since.
3. "Get rich quick" schemes are usually just that ... schemes
Finally, Jennifer explained to me that if I was going to invest in the stock market, I needed to be in it for the long haul.
She explained that many young investors have been taken advantage of by the promise of "get rich quick" investments. But Jennifer warned against trying to time the market or buying speculative investments.
Instead, she said that she believed in "boring" investing strategies. She recommended that I pick mutual funds or ETFs that would provide diversification and that I continue to invest consistently through the ups and the downs.
Jennifer's investing advice has guided me in the last 10 years and I'll continue to follow it throughout my life. If I was out to get rich quick, daily market fluctuations would maybe worry me. But, thanks to Jennifer, I'm playing the long game and I don't stress out about the market, even when it's down.
The bottom line
Meeting with a financial planner at 17 years old helped me build a financial roadmap and set saving and investing goals. Whether you're 17 or 57, a financial planner could help you create a winning financial game plan.
Ready to meet with a financial planner? Use SmartAsset's free tool to find a qualified professional in your area »
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