7 Things Financial Advisors Wish You Knew About Money

Master these basics principles to improve your financial health.

A woman looks at her bank statements.
Get familiar with your bank statements.
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For most of us, the flow of money in and out of our lives is routine, but big-picture financial matters, from saving to paying down debt to investing, can seem overwhelming or impossible. It doesn’t help that personal finance matters are often cloaked in jargon. While it can be tempting to close the tab and put it on the never-ending to-do list for "someday," nothing good results from ignoring money and your financial situation.

We spoke to financial advisors and personal finance experts to find out the most important things you need to know about money so you can confidently make financial decisions and finally tackle those nagging tasks.

1. It’s vital to always have a clear picture of your finances.

Having a sense of your financial health is just as essential as awareness of your physical and mental health, says Danetha Doe, an Oakland-based financial wellness educator and creator of Money & Mimosas.

Too many of us shy away. “I have noticed that people are painfully unaware of their financial health,” Doe says. “Generally speaking, I believe folks avoid thinking about money because it can be stressful.” It can bring up shame and trauma, too, she adds.

Some vital signs for your financial health include knowing how much you earn after taxes, your debt-to-income ratio, the current value of your investments, and if student loan payments go to the principal or the interest, says Doe.

“I recommend having a weekly money date to remain in tune with your financial health,” Doe says. During it, you can reflect on your financial goals, celebrate wins, and generally review your finances.


2. It’s often best to invest now, not later.

Investing is not just for millionaires. Anyone can invest, and starting early offers a major advantage.

That’s due to the power of compound interest, the additional value that comes from investing interest earned, and the Rule of 72, a shortcut formula that helps reveal an investment’s future worth. “This rule approximates the number of years it takes for money to double [with compounding interest],” says Guy Baker, a Certified Financial Planner and founder of Wealth Teams Alliance. To use this rule, just divide 72 by the interest rate. For example, if the interest rate is 4 percent, it will take roughly 18 years for your money to double (72/4=18).

Compounding interest can be a financial game changer, and the more time your investment has to grow, the better. For example, if a 25-year-old invests $10,000 in a fund with a growth rate of 7 percent, by age 70, that money will have grown to $250,000. But a 40-year-old that invests $10,000 at the same growth rate will only have $80,000 at age 70.

Money can grow tremendously with time. “People need to understand what they are missing out if they do not let compound interest work for them,” Baker says.

3. The path to financial well-being is ongoing.

Growing wealth requires consistency, persistence, and time, says Alex Caswell, a Certified Financial Planner at San Francisco’s ​​RHS Financial.

“All too often I see individuals who are hoping that one big trade or a bold move will put them on the trajectory to riches,” Caswell says. This makes people engage in risky behavior instead of trusting in the benefits of compounding, he says.

The real wins come from sticking with a long-term investment plan and adopting a “set-and-forget-it” attitude rather than taking action with every dip or spike of the market.

4. Comparison can cost you.

Did your neighbors get a new car? Are your Instagram pals sunning themselves at a five-star resort? Don’t let that affect your spending, Doe says.

“Most folks fall into financial holes because they are doing what they think everyone else is doing,” she says. Instead, consider what you value. If live music is your passion, then affording shows may mean reducing shopping or travel, Doe notes.

A couple hug while holding the keys to their new home.

Make your long term financial goals a reality.

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5. You need short- and long-term savings goals.

For financial well-being, you’ll need to save a significant portion of what you earn. There are two essential categories of savings:

  • Emergency Funds: Typically, experts recommend having at least three months of living expenses socked away in case of job loss or other emergencies.
  • Retirement Savings: At some point, you’ll stop working—but you will still need to cover expenses. “Most people have never stopped to assess how much income they will need in retirement,” Baker says. Make that your first step, then calibrate retirement savings accordingly.

There are plenty of other reasons to save, such as for your child’s education, a down payment on a house, a wedding, a vacation, and so on. Spend some time learning about what savings accounts you can access and how each of them works, says Logan Murray, a Certified Financial Planner with Pocket Project.

“You can be more efficient with your savings if you are utilizing accounts that defer taxes and grow tax free,” Murray says.

Parents play with their baby on the floor.

Set aside money each month for things that bring you joy.

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6. It’s okay to spend some money to increase your joy and reduce stress.

The power of being diligent about saving and investing, paying down debt, and reducing your overall expenses shouldn't be underestimated, but you can’t put life on hold until you reach your financial goals.

Take some opportunities to enjoy the moment. “Live for today too. Life is tough and we all work very hard for our money, so consider taking that trip now before your knees get bad,” recommends Mel O, a Certified Financial Planner, author, and co-host of the podcast Finances: The Other F Word.

In fact, William Nunn, Certified Financial Planner and founder of Horizon Financial Planning LLC, suggests setting aside “dedicated fun money.” This amount will vary based on your income and bills, along with your sense of fun, but it often amounts to up to 5 percent of take home pay, Nunn says. “Even with my most tightly budgeted clients I will suggest a bare minimum of $250 per month,” Nunn says.

Aim to reserve some of your money for fun, even if you’re focused on saving or paying down debt. “I have found that people who budget for fun while also saving aggressively or paying down debt quickly tend to reach their goals more often,” Nunn says. Without budgets, impromptu splurges on travel and meals are common, but people who give themselves small treats occasionally spend less, he says. “They also don’t freak out about how much they spent afterwards either because it was planned.”

A woman cuts up a credit card.

A financial advisor can help with goals like reducing debt, saving for a home, and retirement planning.

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7. Everyone can benefit from expert financial advice.

Being money-aware and making smart decisions about how you save, pay down debt, and invest can be a solo or family project—but it doesn’t need to be. If you find these topics tedious or overwhelming, take advantage of help: Your bank or retirement fund may even offer the opportunity for free expert input.

But be choosy about where you get your advice. “Non-licensed people on social media do not have your best interest at heart, and have no liability for bad advice and no ramifications,” O says.

A financial planner is an added expense, but can be a temporary one, Murray points out. “You are not getting married to a financial planner—find somebody that works well and teaches you how to use money early, which will benefit you for a lifetime,” he says. Once you’ve learned the ropes, turn to a DIY-approach if you prefer, Murray says.

“One of the best investments is in yourself and building your knowledge, especially while you are young,” Murray says.