Wouldn’t it be great to have a financial planner for a best friend?
Just think of all the advice you could get about how you might stay on track financially—and how to make your money work harder for you.
Since most people don’t have that kind of access, allow us to make a few introductions: We picked the brains of six financial planners from LearnVest Planning Services to find out what advice they'd share with the people they love most — from smart ways to help stick to savings goals to how to navigate finances with a significant other.
Get started with a free financial assessment.
Get started with a free financial assessment.
1. Use Gift Cards for Guilt-Free Spending
For small costs that can quickly add up over time — like that daily Starbucks habit or iTunes purchases — consider buying yourself a gift card and load it with a set, budgeted amount at the start of each month. Then go ahead and enjoy those lattes, scones or apps until your card runs out.
“This makes it easy to keep track of small, daily expenditures,” says Natalie Taylor, CFP®. “Plus, it feels more special and guilt-free when you're paying with a gift card.”
2. Ease Into Merging Your Money
If you’re just starting to share in financial decisions with a significant other, Stephany Kirkpatrick, CFP®, suggests keeping a “slush fund” bank account into which you each set aside money every month to use for one or two joint expenses.
“You can use this to pay for date nights, a vacation or a bigger purchase you want to make together,” Kirkpatrick suggests. “It helps take away the burden of wondering who is going to pay for certain things — and it's a great way to get your feet wet when it comes to joint finances.”
After a few months, you can graduate to contributing enough to the account to cover larger household bills if you live together, and before you both know it, the concept of combining your finances probably won’t be as overwhelming.
3. Be Smart About Insurance
“So many people get talked into buying extended warranties on electronics or insurance on their cell phones,” says Tom Gilmour, CFP®, who tells his friends to skip these purchases and consider using that money to buy term life insurance and disability insurance instead.
David Blaylock, CFP®, agrees. “Life and disability insurance are often overlooked and shouldn’t be,” he says. “For most of us, the greatest asset we have is our ability to earn income. If we become sick (or die) and we lose that ability, it can be financially devastating. I see clients all the time who have these benefits available to them through their employers and simply haven’t signed up for them.”
“Jot down all of the things under $30 that are little, feel-good splurges — and when you need to treat yourself or someone, pull from this list.”
4. Treat Yourself
Yes, financial planners do tell their loved ones to spend their hard-earned money, in addition to saving it.
“Jot down all of the things under $30 that are little, feel-good splurges — and when you need to treat yourself or someone special, pull from this list,” Kirkpatrick says.
“Whether it’s frozen yogurt, an impromptu yoga class, a few copies of recent New York Times best sellers or a nice bottle of wine, $30 can give you the happiness boost you need — without derailing progress you've made on your financial goals.”
5. Draw Up a Postnup
“I recommend prenups and postnups,” says Brandie Farnam, CFP®. “If you think about it, people are most inclined to be fair and equitable when things are happy and stable in a relationship — not when you’re fighting for things while parting ways.”
Farnam adds this is especially important for stay-at-home moms, who should protect themselves financially if they opt to leave the workforce for an extended period to raise a family.
6. Practice Living on One Income
Thinking of having a baby and trying to decide whether you can afford for one parent to scale back at work or quit altogether? Farnam tells her friends to completely bank the income they’re thinking of dropping (or reducing) for six months — and only relying on the other salary to cover expenses during that period.
“This will give you a sense of how it’ll really feel before you make such a huge, potentially irreversible [career] decision,” she says.
7. Set Up a 529 Plan for a New Baby Right Away
Speaking of kids, Gilmour tells all of his new-parent friends to consider setting up a 529 plan — even if they can’t immediately afford to start saving for college themselves. Why? “You can use it to deposit monetary gifts received from grandparents, aunts, uncles and friends,” he explains.
“Dedicate a certain percentage of your income and all money windfalls, like bonuses, to put into a ‘fun account.’”
8. Don’t Forget to Save for Fun
Taylor tells all of her friends to consider opening a “fun account,” so they can splurge without guilt every once in a while. Taylor and her husband used their own fun account to buy a used elliptical machine, pay for a private Pilates trainer and go on a post-maternity wardrobe shopping spree.
RELATED: Why You Need to Splurge On Yourself
“Dedicate a certain percentage of your income and all money windfalls, like bonuses, to put into this account,” Taylor suggests. “10% is a great place to start.”
You can accomplish the same idea the old-school way too. “One of my friends was able to treat a few of us to a poolside cabana when we were on vacation because she'd been putting small bills into a ‘fun jar' for guilt-free splurges just like that,” Farnam says.
9. Help Make Investments Mindless
Don't want to hire an investment adviser or don't have the confidence to manage your own portfolio? “Consider using an all-in-one asset allocation fund to help ensure you always have a diversified asset allocation,” says Elizabeth Sklaver, CFP®.
“Also, when buying investments, be sure to check your firm’s NTF/commission-free list, so you’re not paying fees you may have avoided. If you are contributing regularly and paying a fee for each trade, it may be worth it to switch firms.”
RELATED: How to Choose a Financial Planner
10. Make Sure Both Partners Are Saving for Retirement
Staying home to raise the kids? If possible, you should still be saving for your golden years, notes Kirkpatrick. “I tell my girlfriends that if they choose to leave their jobs, they should maximize a Spousal IRA or Spousal Roth IRA,” she says. “This way, retirement savings is accumulating in their name, in addition to what their spouse saves for the future.”
11. Fill Out Beneficiary Forms — and Keep ’Em Current
Kirkpatrick says she’s amazed by the number of people who go through the major effort of saving for retirement or signing up for life insurance benefits — yet skip the simple step of filling out a beneficiary form.
“Since a beneficiary form is a substitute for a will, this is a critical document that allows money to transfer to a beneficiary directly — without the overhead or complexities of probate,” she says.
This can become especially important, she explains, if you aren’t married or if you want someone other than your spouse to inherit your money. “Just remember that if something changes — say, you get married or divorced — you need to update paperwork everywhere,” she says.
“I find that those who don’t get into the habit of giving early on rarely become charitable.”
12. Give Back
One of Blaylock's favorite tips? Donate some of your hard-earned money. “We all want to be more charitable, and it’s my belief that those people who set aside money to support various organizations live richer lives,” he says.
Choose an amount you can afford to donate each year — and consistently give it away. “I hear people say that they will give when they are older,” he says. “But I find that those who don’t get into the habit of giving early on rarely become charitable.”
13. Review Your Employer's Benefits
Yes, your eyes may glaze over when you’re reading the fine print. But really understanding what’s offered to you can help you take advantage of any "free money," like a 401(k) matching program, health savings account or a pretax commuter benefit, says Gilmour. “Also, if you donate to charity," he says, "many large companies are willing to match your gift, which helps your dollar go even further.”
14. Create a Budget
It doesn’t sound very insider-y, but financial planners often say they are shocked by how few people have a budget.
Blaylock says that you should start by asking yourself these key questions: How much are your monthly fixed expenses? How much are your variable or flex expenses each month? How much is your net income?
Armed with the answers, you can then sit down to map out a monthly budget that can help keep you on track to meeting your financial goals.
RELATED: Budgeting 101
Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
No investment strategy can guarantee a profit or protect against loss. All investing carries some risk, including loss of principal invested.