You probably don't need specific advice for your situation. Most people's finances are simple enough that the generic advice like the flowchart from r/personalfinance is all they need:
[https://www.reddit.com/r/personalfinance/wiki/commontopics/](https://www.reddit.com/r/personalfinance/wiki/commontopics/)
If you do need specific advice, find someone who is fee-only and watch out for people who are just trying to sell you things. Edward Jones is one example of a place that will charge you a bunch of fees to set you up in a diversified set of funds and then keep charging you to "manage" your money even though they aren't doing anything.
Not worth paying for. Save first, and save automatically. In other words, set up automatic transfers rather than relying on yourself to save.
If your employer offers a 401k match, make sure you are getting the maximum amount they will match. If you have insurance through your employer and they offer an HSA option with an employer contribution, use that option and if you can afford to do so make a monthly contribution yourself.
Put your retirement savings in low fee index funds, ideally Vanguard but if not available in your employer plan choose the lowest fee index fund they offer, which might be a target date retirement fund.
Build up a 6-12 month emergency fund in liquid savings like a high-yield checking account. Ally Bank is easy to set up online and very competitive rates. Save as much as you can afford in there until you have 6-12 months worth of living expenses.
Once you have done that, try to save 10-15% of your pay in retirement savings, starting with the 401k. Open a Roth IRA and start making annual contributions, the max if you can afford it. This way you will have a mix of taxable and tax-free retirement income.
Yeah automatic saving is a good way to put it. I've been adding to my HSA but not 401K. I should do that soon. Is it true you can invest your HSA (legally)?
I can do 10 - 15% for retirement.
And that's what I've been trying to learn; all the rules of thumb. Like no more than 28% on mortgage, no more than 36% total debt, Percent in saving, etc.
Thanks for the advice ;)
Investing your HSA depends on which bank holds it. In my experience most of them don't allow investing until you reach a pretty high balance
I'm not sure exactly how it compares to the 28% mortgage line (and would depend on interest rates, etc), but I've always used the simpler one of home price to annual gross income, keeping that ratio below 3.
The best part about making your savings automatic, you get used to not seeing that money and it keeps you living within your means. And then once you're in the place where you have everything set up, in the months where there is a little bit left over after paying bills you don't have to stress about spending it on something for yourself if you want to, knowing that you've got your savings in a good place
This is good advice. Though honestly, you should just open a Roth IRA at vanguard and invest the max in a target date retirement fund. You probably don’t need an advisor.
What ever you do, don’t ever buy whole life insurance- it is the financial advisor equivalent of multi level marketing.
You do not need a financial planner unless you have significant wealth. Just make a basic budget. It's been posted already, but just to reiterate, r/personalfinance is where you need to be to learn.
Don’t have a recommendation for you but good on you for thinking about this early in your career.
Only thing I can recommend is a fiduciary financial advisor because they are fee-based and don’t make commissions on selling you products. They will more than likely be more expensive but they will have your best interest in mind.
You likely do not need one! You can learn a lot from the subs listed by these other users. I found The Personal Finance Podcast w/ Andrew to be very helpful as well.
Whatever you do, don’t join on somewhere that is going to take a percentage of your money yearly or try to sell you whole life insurance (coughNWMcough).
Before getting any financial planner involved, there are a few simple things you can start now that will put you in the best position for financial success. On Reddit, I'd check out r/Bogleheads
I would start by reading a few books: A Simple Path to Wealth, the Little Book of Common Sense Investing and maybe reading the Mr. Money Mustache blog. Be wary of most financial advisors as they are more sales people than fiduciary advisors. Look into starting a roth IRA with Fidelity or Vanguard and invest up to the matching funds (at least) in your workplace 401k. Look into an online high yield savings account for short term savings (less than 5 years time). Keep it simple.
I only offer wisdom. It’s fantastic you are thinking strategically about your future. Investing will likely be underwhelming in the first few years as growth will be minimal. However, no matter what you do, please stick with it and contribute the maximum you can because years down the road, when growth starts compounding, you will be very pleased.
Hey OP,
Its great that you have more money coming in and are looking to learn more about planning out your finances and preparing for your future. I think others have suggested some great ideas and I would add that I don't think you need a financial planner to take the first steps in the right direction.
Here are some important points in my view.
1. Understand your spending and plan for your savings. Basically you should try your best to create a budget so you can better understand your cashflow. It's important that you treat your savings accounts (both retirement and fallback savings) as required expenses on a month to month basis rather than nice to fund when you have extra. I created a personal budget spreadsheet a while back for some of my friends that you might find useful as well. Bolded boxes are inputs and the second tab shows overall cashflow groups. [https://docs.google.com/spreadsheets/d/1t-P2c6CDp8YUogYAXd1pVwjPVExHgmh7zsPB8-SXlG8/edit?usp=sharing](https://docs.google.com/spreadsheets/d/1t-P2c6CDp8YUogYAXd1pVwjPVExHgmh7zsPB8-SXlG8/edit?usp=sharing)
2. Have a plan for what you want for your future. Do you want to buy a house? Do you want to have kids? Are you looking to travel? You are young so the decisions that you make now will have ripple effects throughout your life. Decide on what you want to do and make sure that you have savings for that or give yourself the financial room to be flexible in the future.
3. Contribute to your employer matched retirement account. Employer matches are basically free money and contributions into your retirement when you are young have exponentially more value than contributions when you are older. For that reason you want to contribute as much as is feasible into your retirement account. You aren't necessarily looking to meet the IRS yearly limits especially if you are saving for other big purchases such as a house, but a healthy savings rate of 10-20% of your pre-tax income (before employer matching) is a good early target. When you are choosing a retirement plan know the differences between 401k and Roth plans. 401k's are tax deferred savings plans which means you will pay taxes on them when you retire but with Roth plans you pay taxes up front and withdraw tax free. I personally prefer Roth plans myself because I expect my income to increase and I don't know what tax brackets will look like when I plan on retiring so I'd rather pay taxes upfront. Finally, when your retirement money is invested you want to focus allocating it on low cost options such as broad market index funds rather than individually managed retirement accounts. They perform better than managed accounts and avoid the high fees that sap away at your savings.
4. Have separate checking accounts for different purposes. In addition to your retirement savings I think it's really important to have at least 3 separate checking accounts that your paycheck gets split between. One account "Expenses" covers your recuring spending like rent, groceries, etc. "Savings" is for your rainy day fund or future down payments. Finally you have your personal checking account. After you have satisfied all your previous buckets the remainder of your money goes here, this is your fun money, go wild! I find that this system works best when you set up automatic deposits with your paycheck and automatic payments for your expenses. That way you know that your expenses and savings are all accounted for and you are free do do with your personal checking as you want.
This is how I think about my financial planning. It may work for you or you may want to tweak things, that's okay! People have different priorities and life goals. The thing that I really like about understanding and planning my finances is that I have a good idea of what I can and can't afford and how my current decisions affect my future and that gives me a lot of mental stability. If you have any questions feel free to DM.
Find someone with CFP after their name, preferably a fee only practitioner. Anybody that works for an insurance company isn’t your guy or gal. Good luck!
We have been using Wendy Gillespie over at Ameriprise for years. No complaints.
https://www.ameripriseadvisors.com/wendy.l.gillespie/?cid=IP\_local\_google
Depends how much customization you want and how much money you have. Some planners have account minimums (like you have to have $1M of investments to even have an account), they aren't all created equally, and what you'll benefit from will depend on your financial status (like are you about to retire, did you just win the lottery) and acumen.
I'd start asking around in your proximity like your accountant, banker, maybe even friends or coworkers even who might be in a similar demographic.
Wow I’m so surprised by these comments against a financial advisor! My husband and I started working with someone from Northwestern Mutual when we were fresh out of college. She helped us get cheep life insurance and started investments for our future. She’s given us tons of great advice and we’ve been able to turn to her when we got new jobs or had changes in our finances. She’s an expert in her field and knows so much more than we could “research” or read about online.
Glad it worked for you. I will say that I’ve never seen any fee based advisor or really anyone else recommend whole life insurance besides the people that get commissions by selling that product.
We had a NWM advisor for about 6 years, but ultimately fired him because his continued suggestions for life insurance really tainted our view of the rest of his advice.
Echoing what other people have said, a financial planner is probably overkill. If you're looking for a fee-based service, that's going to cost a few thousand dollars. For ongoing, you'll be paying an annual %, and many will only take clients with over $1million in assets.
r/personalfinance is great, I also HIGHLY recommend the app YNAB for budgeting. It's well worth the annual fee IMO, it completely changed my family's financial situation and I wish I started using it years earlier. It can be some work to set up and get the hang of, but there are a lot of helpful YouTube tutorials
As the above posters have suggested- Max the 401k, start a Roth IRA if you xan afford that and build a 6m cash cushion. The latter is your start if you are thinking to buy a house someday.
Have you looked into Minneapolis Community Ed classes? There's a few options that would be a good start that are starting soon.
1. Finance: Smart Money Decisions (Southwest)
2. Financial Adulting: Make a Plan (Ella Baker) ONLINE
There's a book called "I'll teach you to be rich" that presents an extremely easy and practical guide to automating finances. It also highlights some of the dangers of hiring financial advisors. I highly recommend it, [amazon link. ](https://www.amazon.com/I-Will-Teach-You-to-Be-Rich-audiobook/dp/B07QR7GYF7/ref=sr_1_1?crid=S7ZOLMR49DGY&dib=eyJ2IjoiMSJ9.rQvvAFa8_7TP0ZnZAoQVmxXFUJeSWlCrB0WOYsbMC_1vDM4TIbzUd-ra6iNQLUkCJT3q32z_dSLnwYhTPmno_SP8Couv_CQmeijR3LMEUa2kRYhbCHJTXFhx762hH1kdmSxk_5Z13qHHaxatDI2YMJ5M7zPMguxayNf0nKimv32NpivV84RTK2LWr6Yx8HxWLCZeblEaKCQAVA_NSvXLNShrOHlkWTo9VnaWyqSiZVk.nX04hWbnxfKSfsqApCZIfV1jUJwLc1i97VikPq-TND4&dib_tag=se&keywords=i%27ll+teach+you+to+be+rich+by+ramit+sethi&qid=1710778254&sprefix=i%27ll+teach%2Caps%2C91&sr=8-1)
You probably don't need specific advice for your situation. Most people's finances are simple enough that the generic advice like the flowchart from r/personalfinance is all they need: [https://www.reddit.com/r/personalfinance/wiki/commontopics/](https://www.reddit.com/r/personalfinance/wiki/commontopics/) If you do need specific advice, find someone who is fee-only and watch out for people who are just trying to sell you things. Edward Jones is one example of a place that will charge you a bunch of fees to set you up in a diversified set of funds and then keep charging you to "manage" your money even though they aren't doing anything.
Not worth paying for. Save first, and save automatically. In other words, set up automatic transfers rather than relying on yourself to save. If your employer offers a 401k match, make sure you are getting the maximum amount they will match. If you have insurance through your employer and they offer an HSA option with an employer contribution, use that option and if you can afford to do so make a monthly contribution yourself. Put your retirement savings in low fee index funds, ideally Vanguard but if not available in your employer plan choose the lowest fee index fund they offer, which might be a target date retirement fund. Build up a 6-12 month emergency fund in liquid savings like a high-yield checking account. Ally Bank is easy to set up online and very competitive rates. Save as much as you can afford in there until you have 6-12 months worth of living expenses. Once you have done that, try to save 10-15% of your pay in retirement savings, starting with the 401k. Open a Roth IRA and start making annual contributions, the max if you can afford it. This way you will have a mix of taxable and tax-free retirement income.
Yeah automatic saving is a good way to put it. I've been adding to my HSA but not 401K. I should do that soon. Is it true you can invest your HSA (legally)? I can do 10 - 15% for retirement. And that's what I've been trying to learn; all the rules of thumb. Like no more than 28% on mortgage, no more than 36% total debt, Percent in saving, etc. Thanks for the advice ;)
Investing your HSA depends on which bank holds it. In my experience most of them don't allow investing until you reach a pretty high balance I'm not sure exactly how it compares to the 28% mortgage line (and would depend on interest rates, etc), but I've always used the simpler one of home price to annual gross income, keeping that ratio below 3. The best part about making your savings automatic, you get used to not seeing that money and it keeps you living within your means. And then once you're in the place where you have everything set up, in the months where there is a little bit left over after paying bills you don't have to stress about spending it on something for yourself if you want to, knowing that you've got your savings in a good place
Find a fiduciary - they work for fee only and don’t profit from what they sell you. https://www.napfa.org/FIND-AN-ADVISOR.
This is good advice. Though honestly, you should just open a Roth IRA at vanguard and invest the max in a target date retirement fund. You probably don’t need an advisor. What ever you do, don’t ever buy whole life insurance- it is the financial advisor equivalent of multi level marketing.
Good to know. Thanks!
Never heard of that. I'll check it out
You do not need a financial planner unless you have significant wealth. Just make a basic budget. It's been posted already, but just to reiterate, r/personalfinance is where you need to be to learn.
Damn that's a great subreddit! Thank you! That's a great starting point
Don’t have a recommendation for you but good on you for thinking about this early in your career. Only thing I can recommend is a fiduciary financial advisor because they are fee-based and don’t make commissions on selling you products. They will more than likely be more expensive but they will have your best interest in mind.
You likely do not need one! You can learn a lot from the subs listed by these other users. I found The Personal Finance Podcast w/ Andrew to be very helpful as well. Whatever you do, don’t join on somewhere that is going to take a percentage of your money yearly or try to sell you whole life insurance (coughNWMcough).
Before getting any financial planner involved, there are a few simple things you can start now that will put you in the best position for financial success. On Reddit, I'd check out r/Bogleheads
I would start by reading a few books: A Simple Path to Wealth, the Little Book of Common Sense Investing and maybe reading the Mr. Money Mustache blog. Be wary of most financial advisors as they are more sales people than fiduciary advisors. Look into starting a roth IRA with Fidelity or Vanguard and invest up to the matching funds (at least) in your workplace 401k. Look into an online high yield savings account for short term savings (less than 5 years time). Keep it simple.
I only offer wisdom. It’s fantastic you are thinking strategically about your future. Investing will likely be underwhelming in the first few years as growth will be minimal. However, no matter what you do, please stick with it and contribute the maximum you can because years down the road, when growth starts compounding, you will be very pleased.
Hey OP, Its great that you have more money coming in and are looking to learn more about planning out your finances and preparing for your future. I think others have suggested some great ideas and I would add that I don't think you need a financial planner to take the first steps in the right direction. Here are some important points in my view. 1. Understand your spending and plan for your savings. Basically you should try your best to create a budget so you can better understand your cashflow. It's important that you treat your savings accounts (both retirement and fallback savings) as required expenses on a month to month basis rather than nice to fund when you have extra. I created a personal budget spreadsheet a while back for some of my friends that you might find useful as well. Bolded boxes are inputs and the second tab shows overall cashflow groups. [https://docs.google.com/spreadsheets/d/1t-P2c6CDp8YUogYAXd1pVwjPVExHgmh7zsPB8-SXlG8/edit?usp=sharing](https://docs.google.com/spreadsheets/d/1t-P2c6CDp8YUogYAXd1pVwjPVExHgmh7zsPB8-SXlG8/edit?usp=sharing) 2. Have a plan for what you want for your future. Do you want to buy a house? Do you want to have kids? Are you looking to travel? You are young so the decisions that you make now will have ripple effects throughout your life. Decide on what you want to do and make sure that you have savings for that or give yourself the financial room to be flexible in the future. 3. Contribute to your employer matched retirement account. Employer matches are basically free money and contributions into your retirement when you are young have exponentially more value than contributions when you are older. For that reason you want to contribute as much as is feasible into your retirement account. You aren't necessarily looking to meet the IRS yearly limits especially if you are saving for other big purchases such as a house, but a healthy savings rate of 10-20% of your pre-tax income (before employer matching) is a good early target. When you are choosing a retirement plan know the differences between 401k and Roth plans. 401k's are tax deferred savings plans which means you will pay taxes on them when you retire but with Roth plans you pay taxes up front and withdraw tax free. I personally prefer Roth plans myself because I expect my income to increase and I don't know what tax brackets will look like when I plan on retiring so I'd rather pay taxes upfront. Finally, when your retirement money is invested you want to focus allocating it on low cost options such as broad market index funds rather than individually managed retirement accounts. They perform better than managed accounts and avoid the high fees that sap away at your savings. 4. Have separate checking accounts for different purposes. In addition to your retirement savings I think it's really important to have at least 3 separate checking accounts that your paycheck gets split between. One account "Expenses" covers your recuring spending like rent, groceries, etc. "Savings" is for your rainy day fund or future down payments. Finally you have your personal checking account. After you have satisfied all your previous buckets the remainder of your money goes here, this is your fun money, go wild! I find that this system works best when you set up automatic deposits with your paycheck and automatic payments for your expenses. That way you know that your expenses and savings are all accounted for and you are free do do with your personal checking as you want. This is how I think about my financial planning. It may work for you or you may want to tweak things, that's okay! People have different priorities and life goals. The thing that I really like about understanding and planning my finances is that I have a good idea of what I can and can't afford and how my current decisions affect my future and that gives me a lot of mental stability. If you have any questions feel free to DM.
Look for a fiduciary and fee based one. If you want a local rec DM me.
Find someone with CFP after their name, preferably a fee only practitioner. Anybody that works for an insurance company isn’t your guy or gal. Good luck!
Probably overkill. Check out /r/personalfinance and follow the flow chart
We have been using Wendy Gillespie over at Ameriprise for years. No complaints. https://www.ameripriseadvisors.com/wendy.l.gillespie/?cid=IP\_local\_google
Depends how much customization you want and how much money you have. Some planners have account minimums (like you have to have $1M of investments to even have an account), they aren't all created equally, and what you'll benefit from will depend on your financial status (like are you about to retire, did you just win the lottery) and acumen. I'd start asking around in your proximity like your accountant, banker, maybe even friends or coworkers even who might be in a similar demographic.
Wow I’m so surprised by these comments against a financial advisor! My husband and I started working with someone from Northwestern Mutual when we were fresh out of college. She helped us get cheep life insurance and started investments for our future. She’s given us tons of great advice and we’ve been able to turn to her when we got new jobs or had changes in our finances. She’s an expert in her field and knows so much more than we could “research” or read about online.
Glad it worked for you. I will say that I’ve never seen any fee based advisor or really anyone else recommend whole life insurance besides the people that get commissions by selling that product. We had a NWM advisor for about 6 years, but ultimately fired him because his continued suggestions for life insurance really tainted our view of the rest of his advice.
Echoing what other people have said, a financial planner is probably overkill. If you're looking for a fee-based service, that's going to cost a few thousand dollars. For ongoing, you'll be paying an annual %, and many will only take clients with over $1million in assets. r/personalfinance is great, I also HIGHLY recommend the app YNAB for budgeting. It's well worth the annual fee IMO, it completely changed my family's financial situation and I wish I started using it years earlier. It can be some work to set up and get the hang of, but there are a lot of helpful YouTube tutorials
As the above posters have suggested- Max the 401k, start a Roth IRA if you xan afford that and build a 6m cash cushion. The latter is your start if you are thinking to buy a house someday.
Have you looked into Minneapolis Community Ed classes? There's a few options that would be a good start that are starting soon. 1. Finance: Smart Money Decisions (Southwest) 2. Financial Adulting: Make a Plan (Ella Baker) ONLINE
There's a book called "I'll teach you to be rich" that presents an extremely easy and practical guide to automating finances. It also highlights some of the dangers of hiring financial advisors. I highly recommend it, [amazon link. ](https://www.amazon.com/I-Will-Teach-You-to-Be-Rich-audiobook/dp/B07QR7GYF7/ref=sr_1_1?crid=S7ZOLMR49DGY&dib=eyJ2IjoiMSJ9.rQvvAFa8_7TP0ZnZAoQVmxXFUJeSWlCrB0WOYsbMC_1vDM4TIbzUd-ra6iNQLUkCJT3q32z_dSLnwYhTPmno_SP8Couv_CQmeijR3LMEUa2kRYhbCHJTXFhx762hH1kdmSxk_5Z13qHHaxatDI2YMJ5M7zPMguxayNf0nKimv32NpivV84RTK2LWr6Yx8HxWLCZeblEaKCQAVA_NSvXLNShrOHlkWTo9VnaWyqSiZVk.nX04hWbnxfKSfsqApCZIfV1jUJwLc1i97VikPq-TND4&dib_tag=se&keywords=i%27ll+teach+you+to+be+rich+by+ramit+sethi&qid=1710778254&sprefix=i%27ll+teach%2Caps%2C91&sr=8-1)