I hesitantly unveiled the documents and information I was asked to bring: my monthly expenses, bank account and credit card balances, IRA/401K statement and/or brokerage account, credit score, and goals for the year and the future. That's when she pulled out a questionnaire and I started getting financially naked. We went through my money history and ended with a question I had never been asked before.
“What’s your sacred cow?”
I learned that is an item that you must-have every month. For some, it might be getting their nails done or eating meals out once a week. My answer? Taxi cabs to and from the airport. Since I travel a lot, having to go to the airport at 3 a.m. just isn’t something I want to do via subway or train and paying the money for a taxi is my non-negotiable spending item every month.
We laughed, I cried, Georgina took notes and did every comforting thing a therapist would do, short of saying, "Tell me how that made you feel". When the session was over, she had my entire financial blueprint on a piece of paper and I was hugging her as one would a good friend. That second session I was initially hesitant about was already on my calendar for two weeks later.
What I learned from getting “Financially Naked”
That's when the fun started. I met Georgina again late on a Saturday afternoon, and in her hands was a folder filled with a detailed report on my financial mistakes, goals and future plans.
The report is 18 pages long and Georgina walked me through every single word on the report, explaining things to me and asking questions. Here are the three biggest financial takeaways that changed my personal money game:
1. Make an emergency fund ASAP
As a self-employed business owner and freelancer, one of the things that I always had in the back of my mind, but never acted on, was having a game plan in case something happened to my health or work status (clients letting me go or no new projects coming in). Georgina recommended starting an emergency fund ASAP.
“Typically, we instruct clients to save between three and six months of expenses as their emergency fund,” Georgina wrote in the report. “Since you are self-employed, you should target two additional months to be extra secure.”
Georgina recommended putting this in a separate savings account and going forward allocating at least 20 percent of my gross income each month to this account.
2. Consider investing a percentage of saved cash
One conversation that made me itch with nerves was over my retirement plans. Other than having a SEP IRA, Georgina recommended considering investing to meet other goals, both now and in the future.
“I recommend you start to think about what you might like to invest for,” Georgina wrote. “Your asset allocation will vary, depending on the time frame for using the money.”
Her report also detailed the breakdown of stocks and bonds based on my investment goals. (For me, my short-term allocation was 60 percent stocks and 40 percent bonds).
I knew that before I began investing, I needed more education. Georgina pointed me to a handful of books and podcasts to listen to. While this was something Georgina put in my "game plan" for immediate consideration, it was something I decided to mentally file for later this year, only after I've done my research to make sure I'm investing smart and doing it at a place that doesn't swarm me with hidden fees.
My immediate takeaway, though, was to increase my monthly contribution to my SEP IRA, which Georgina recommended I do just based on how much I have in savings and how much I'm making every month, and to consider putting money into investments, which I promised I'd do sometime in Q3 after conducting more research.
3. Play the points game
Since I travel a lot, for both work and fun, and have a good credit score, Georgina recommended that I pay particular attention to earning rewards for travel and consider if I was maximizing the potential benefits.
One immediate takeaway was to look over my credit cards and assess my miles. When doing that, I realized I had a pool of travel miles that could cover a few upcoming flights later this year. The advice also made me start a conversation with my landlord to see if I could pay my rent via credit card (the answer was yes), so that I could gain even more miles a month on the card for future travel. This simple change wasn't only enough to fund more travel adventures in the future, but could actually save me money on travel I already had on the calendar.
Georgina also noted that the biggest benefit of these cards comes from the sign-up offers when you open them, so I made a mental note to follow this rule before any big life event where I’ll have to make expensive purchases, like moving to a new apartment and finding myself in need of furniture or planning a future wedding. During these types of major life events, it may pay off to open a new card and capitalize on the generous sign up bonuses that come with hitting the spending threshold over the first couple of months.
When the session was over, my head was pulsing and my wallet was smiling. I took the report and held it close, realizing the power of those pages of personalized money suggestions. Would I follow them all? Yes and no. I told myself I’d start slow. I set a 2019 goal of implementing three pages of the report each month into my financial habits.
Just like a personal trainer whips you into shape for bikini season, my time with a financial trainer kicked my butt into finally getting smarter about my finances. And I must say, stripping down to my metaphorical underwear has left me feeling more outfitted to take control of my financial future than ever before.
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