Thursday, May 13, 2010

Find A Financial Mentor

Tip #256 - Find A Financial Mentor. If you are not knowledgeable about finances, investing, savings, budgeting, and other things related to money, then find someone who is knowledgeable about it. It could be a family member, a friend, a co-worker, a church member or a neighbor. Make sure the person DOES know what he's talking about - that he's not someone who boasts that he makes 20% in the stock when he really doesn't. Instead, find someone with overall financial wisdom - one who has built up savings, knows at least some about investing, is knowledgeable about tax laws. Make sure the person is someone whose investment and savings habits seem to mirror your own. And once you find that person, pick his or her brain.

Most people will be honored that you are asking for their help. If the person you are asking does not want to be helpful, then find someone else. Once you find a good person, ask questions. You don't have to get too personal with how much money he has or how much you make - you can ask general questions. What did you do to save up for retirement? What do you think my best options are for saving for college? Do you know what the benefits are for saving in my 401(k)? What should I do with 401(k) rollover money?

These are the types of questions an investing novice should ask an experienced person with finances. Not unlike questions a new mom would ask a seasoned one. When a woman has a baby she doesn't suddenly know how to be a perfect parent. She usually asks questions of experienced mothers - their own moms, sisters, aunts, friends. This is the same idea. Again, it doesn't have to get too personal. You don't need to say to your neighbor, "I make $50,000 and want to save for retirement. What's the best way?" Instead you can say, "I have a few hundred dollars left over each month after all of our expenses. What would you do with it to save for retirement?"

On the other hand, if you are close to the person, the more information you can give the better - you might be comfortable giving more detailed information to a parent, sibling, aunt or uncle, or close friend, for example. Do what you are comfortable doing. Talk in general terms if you want or specifics if you do not mind. Just find someone who you can call or ask in person when you have a money-related question or to just get some financial advice.

In Real Life (IRL) - Discussing finances with other people is often seen as one of those "hush hush" topics. And it doesn't have to be. Sure we don't need to be broadcasting to the world that we are making $100,000 per year. But there is no reason why a couple of friends cannot discuss investment strategies or how to improve savings without revealing their salaries. And there's no reason why you cannot tell some trusted folks your salary if you want more specific advice.

I am fortunate that my father is my financial mentor. He is self-taught - he never went to college or studied finances formally. But he spent many hours listening to radio finance talk shows, reading books, and talking to people more experienced than he. In doing so, he became very knowledgeable about various savings vehicles and investment choices. Whenever I have a question, I know I can ask him. In fact, he figuratively held my hand when I invested in my first mutual fund. I have gotten advice from him about where to invest, how to handle financial situations like where to put a 401(k) money after I leave a job, and just how to save money overall. Now that I am experienced, I usually decide what I am going to do ask what he thinks. But early on, I would just ask him what I should do.

For specific tax questions, I usually double-check with my brother who is a trained accountant and certified financial planner. His investment style is much different than mine (he is much more willing to take on risk and debt), though. So if I ask for his advice, I usually take it with a grain of salt. But the point is, I have found people that I can go to if I have questions. Sure, I can pay a financial advisor if I have to. But for many people that is not necessary. If there is someone close to them who knows his way around savings, that person can usually give unbiased advice for free. (Caveat: If you just inherited $500,000 or have complicated investment or tax questions, a professional, independent financial advisor is best to go to). For general questions, look to someone in your circle of family and friends who can give you guidance as you make financial decisions. For other financial ideas, check out Frugal Fridays.


Sherry said...

Thank you for sharing! My mom is my financial mentor. She is a huge whiz in financial things. :D I need to go to her more often though.

Have a great weekend!

Christy Wheeler said...

My husband is my financial mentor... He is so great with money and I have learned a lot from him!