How to Think Like a Financial Adviser

Overwhelmed by amorphous long-term money goals? Personal-finance consultant Ashley Feinstein leads a crash course to help you get a handle on your dreams.

Photo by Larry Washburn/Getty Images

Name (and Date) Your Goals

Says Feinstein: “Many people don’t know how much it would take to reach their goals. So start by making each one specific and measurable—and attach a deadline. For example, ‘I want to buy a house within five years.’ Then fill in the blanks. Look at housing prices in your ideal area and work backward from the down payment. This gives you a number—an amount you need to save monthly to fulfill your five-year plan. If the monthly savings goal doesn’t seem doable, you need to look at the variables. Do you really need a house that size? Is the neighborhood critical? And adjust for reality. You may need to add a year and subtract a bedroom.”

Examine Spending

“I have clients track their expenses for at least a week prior to our first meeting and then for three weeks after. People hate this. But ultimately they say that learning where their money goes is a huge relief. You have to really look at your behavior to change it. To make your tracking easier, use a tool like Mint or MoneyWiz.”

Tailor and Target Savings

“Most of us are saving for a few things at once—retirement, college, emergencies. Some savings accounts allow you to create ‘goal buckets,’ which make it easier to automatically put money toward each priority. Saving for emergencies is tricky because it’s so vague. I have clients think through emergency situations to make it more concrete. The obvious one is loss of a job. How much money would you need per month to feel comfortable, keeping in mind that emergency spending is not the same as regular spending? (You’ll eliminate frills like dining out, for example.) The rule you may have heard to set aside three month’s salary is not necessarily right for everyone.”

Do a “Values” Exercise

“Ask yourself what really matters to you. Understanding what you most want out of life helps you create financial goals you’re motivated to stick with—and follow through on what it takes to reach them. Typically people find that they’re overspending in areas that aren’t even important to them. Let’s say you discover that you value traveling and time with friends most highly. That’s where your money should go. Maybe you’re paying for convenience (ordering lunch at work and eating alone at your desk) when you would be happier long-term if you brought a bag lunch and put the money you saved toward a trip with pals.”

Assert Yourself

“Get in the habit of asking for what you want. Instead of telling friends, ‘I don’t care where we go for dinner,’ offer an idea that makes financial sense for you. People often worry, needlessly, that they’ll be seen as lame for making smart choices. Get over that! You can practice assertiveness in other arenas—at work and when dealing with merchants. I was shocked by a price my dry cleaner gave me and told him so. He wound up giving me a deal. It’s good practice!”

Personalize Your Approach to Debt

“The issue of whether to prioritize saving or paying down debt is an individual one. Killing high-interest debt as soon as possible of course makes sense. But for some people, erasing the smallest debts first helps build momentum. And there’s an emotional component to certain debt. I had a client who was determined to pay off her parents before dealing with any other debt. In any case, reward your successes. Some of my clients throw ‘debt-free’ parties. Some keep charts and cross off debts as they pay them. “You might find it easier to reach goals when you get the people close to you involved. If you and a friend tackle debts and share goals and accomplishments, it can be like having a workout partner to keep you motivated and accountable.”

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