I am a recent college graduate and have just started my career. The company I work for has benefits such as 401(k) which I have signed up for. I have some student loan debt and I am looking for someone who can help me manage multiple things. For instance: taxes, student loan debt, retirement and maybe even a few things I am unaware of. My first thought was: "I need a financial advisor." but a simple google search for financial advisors in my area seems to lead me to investment firms. What I need is someone who can help me with more than just investing but debt management and taxes as well. I was hoping someone could help me figure out who it is I am looking for, am I looking for a financial advisor?
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4Based on the reference to 401k I've added a [united-states] tag, if this is wrong please comment or edit - different types of services are managed under different names around the world so what's right for your location may be wrong for others.– VickyMar 27, 2019 at 16:22
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2 Answers
You might be interested in a financial advisor, specifically a Certified Financial Planner (CFP). Advisor is kind of a catchall term, while financial planners are a subset that typically are focused on helping you create and adhere to a financial plan. There are some advisors that are interested in your investment as they profit when you invest through them. Others charge by the hour, I would only use one that I am paying for advice.
However, if your current situation isn't too complicated you could likely get all you need online. Save paying for advice until your situation is a bit more complex.
In general when starting out a career with debt, the advice would be to:
- Contribute to 401k to maximize your employers match
- Save up an emergency fund that's a few months worth of expenses
- Do all you can to pay down the student loan ASAP
One common mistake that people make early in their career is elevating their lifestyle to match their new income. It can be tempting to ditch roommates and get your own place, buy a new car, etc. Living well below your means can get you very far ahead.
Specific topics you might want to research are:
- Emergency fund
- Investment priority list
- Zero-based budget
If you have specific tax questions don't hesitate to ask here, but until your student loans are paid off I would imagine there's not much in the way of tax strategy you need to worry about.
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2I disagree with paying down student loans ASAP - there are many valid reasons not to do so. Mar 27, 2019 at 19:20
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1@DavidRice If OP had an atypically low interest rate, it might be compelling not to pay it off ASAP, but what are some of the many reasons not to?– Hart COMar 27, 2019 at 19:27
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1And any time you pay down debt, you lose a lot of liquidity - building up an emergency fund is more important, in my opinion, than paying down non-revolving debt for that reason. Mar 27, 2019 at 19:37
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2@DavidRice I agree about emergency fund, that's why it comes ahead of paying off debts. Investing instead of paying off debt at say 5% might get you ahead, but it might not, personally I'd take guaranteed interest saving. I'll stick with my caveat, in general it's best to pay off the loan ASAP, but you're definitely right that it could work out better to not in some cases.– Hart COMar 27, 2019 at 19:55
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2@DavidRice Student loans have the disadvantage that they are not dischargeable in bankrupcty. I wouldn't necessarily characterize a 7% interest rate as low. Only a certain amount of student loan interest is deductible, and the phase-out income is relatively low (since I see OP has posted on stackoverflow, it's likely he is some kind of software engineer that is way above the MAGI limit for deducting student loan interest). So I 100% agree with where HartCO has prioritized paying the student loans off.– stanniusMar 29, 2019 at 16:44
For instance: taxes, student loan debt, retirement and maybe even a few things I am unaware of.
Those are things that almost all people have to think about at some point in their lives. Certainly not all people need a financial advisor (of any kind).
My first thought was: "I need a financial advisor."
I would suggest that no, you don't. Your financial situation is not particularly complicated.
What I think you should do is head over to your local library and check out a few books on personal finance. Doing so will set you back by a minimal amount, and should give you access to good overviews of the topics you'd need to cover. Read those books cover to cover, make note of any terms you don't understand, and look up those terms. Focus on books that deal with the general principles rather than specific products; I'm sure your local librarian will be more than happy to help you in picking out good books.
Once you have the foundation to build on, if you feel that you need more in-depth knowledge, you will be in a far better position to (a) know what to look for; (b) ask yourself and others appropriate questions; and (c) understand the answers you get.
Within one or two weekends of reasonably focused studying, you should have more than enough of a working knowledge of the basics that you'll be able to put together a decent budget including student loan repayment, a reasonable retirement savings plan, and knowing what documents to pull together in order to fill out your tax return form. All things that a financial professional would be helping you with – and probably charge you several hundred dollars for the privilege. What's more, you won't have to hire that financial professional again next year to do the same work all over again!
Save the idea of hiring a financial professional for when your financial situation is more complex than that of most people. For most people, that will likely be at most a few times in their lifetime.
