When was the last time you thought to yourself, "I really need a comprehensive financial plan"? Or told a friend, "what's really giving me trouble is aligning my investment allocation with my time horizon"? Ever asked anyone for recommendations for a holistic wealth manager?
If you're like most people, questions like that come up about once every ... never. People don't think like that in real life. Instead, the questions most people have about money (and that keep them up at night) are more like:
Am I saving enough for retirement?
Can I afford to send my kids to school?
Do I have enough money in the bank?
How much will my tax bill be next year?
Do I have enough insurance?
Is this a good time for me to buy a house?
Do I own the right things in my investment accounts?
Am I doing ok?
I am a Certified Financial Planner™ and I'm super proud of that designation. I help creative professionals answer questions like the ones above through financial planning. But, as much as I want to avoid industry jargon, the truth is that most people don't have a clear picture in their heads when they hear a term like "financial plan".
So what does financial planning even mean?
This article is all about what I do and how I help creative professionals. The service might be called financial planning, but you can think of it as "helping people make better decisions with money." Put down your dictionary, close that Investopedia.com tab – you won't need them for this post.
We'll cover:
(Be sure to read to the bottom to find out how you can get a free interactive checklist to help you focus on the most important topics for building & maintaining wealth.)
The truth about managing money as a creator
I worked in the music industry for 18 years and spent a lot of time around creative professionals. Some of them were really successful and made a lot of money, many made enough to afford comfortable lives, and the rest were able to get by (perhaps relying on a second source of income to pay the bills). Regardless of the level of fame or financial success, though, I can't think of a single one who would say they chose to pursue a creative career because they wanted to make a lot of money.
Most creators do what they do because they love it. They couldn't imagine not doing it. That's true whether you work on your own as a musician, author, artist, or podcaster, or if you work a more traditional job as a video game designer, graphic artist, chef, or journalist. It takes a special kind of person to dedicate endless hours to developing a professional skill or craft with almost zero certainty of financial success.
Which is to say: a lot of creative people don't spend a ton of time learning about money.
That might be fine when you're young and just starting out. But not understanding how to manage money becomes a drag in a hurry once you have a mortgage, want to treat yourself to something nice (without maxing out your credit card), or get a little older and realize that some comfort and stability might be a good thing.
If you've never put any time into understanding how your money works, I'll level with you: it's going to take some effort. Not a ton, not so much that you can't handle it, but enough to learn a few basics about managing cash flow, repaying debt, investing for the future, and a handful of other key topics.
And guess what (drumroll): most of the time, a few basic systems are enough to make the leap from "totally in over my head" to "hey, I actually feel like I know what I'm doing". I like to tell people, "you don't need to be a mechanic to know why owning a car is useful, and you don't need to be a finance pro to make better decisions with your money." Useful knowledge that allows you to take action is what we're aiming for.
Don't know where to start? Good news – that's exactly what you get with financial planning.
Want a little extra motivation? I promise you: it's a lot easier for you to learn the basics of how to use your money than it is for someone with a straight job to learn how to write a book, create a podcast, record a song, or take a beautiful photograph. You've got this!
What works – and what's a waste of time & energy
What do you think are the 2-3 most important first steps in managing your money? Maybe creating a budget comes to mind, or perhaps following the stock market. How about researching which credit cards offer the best rewards?
While those topics get a lot of attention, there are other quicker, easier, and smarter ways to improve your financial health. If you are just getting started or are struggling with your current systems, here are 3 ways to really understand what works (and what doesn't):
Collect your financial information in one place - While it might not grab any headlines, having an easy to understand system for organizing and analyzing your financial information is a huge step forward for improving financial health (and peace of mind). Are you saving enough? Spending too much? Do you have the right amount in cash – or too much? Without a way to collect and evaluate your entire financial picture in one place, those questions can seem impossible to answer. With a well-designed system, you can answer them with a glance. (Want to see what this looks like? Click here.)
Understand what you spend - Some people like budgets and use them to transform their financial lives. My hat is off to those people. For most others, a budget represents what you should do with your money – which can lead to shame, embarrassment, or just plain giving up when they are unable to stick with the numbers on the budget. Let's forget about "should" for a moment and focus on reality: just knowing what you actually spend each month is what matters. Knowing your average monthly spending is essential to planning for things like vacations, taxes, and retirement. Best of all: it only takes a few hours a year to really understand what you spend in an average month. (Click here to find out how.)
Automate saving & investing - Are you familiar with the phrase "pay yourself first?" A lot of people wait to see what's left over at the end of the month before deciding to save or invest. This is paying everyone & everything else – lenders, utilities, groceries, subscriptions, dining out, and any number of other fun things you could do with your money – before setting anything aside for yourself. Then another month (or year or decade) goes by without being any better off. Do yourself a solid by automating your saving & investing. That way you can be responsible before deciding whether you should treat yourself to an awesome new gadget or experience. Need some extra incentive? Setting money aside each month allows you to pay for much nicer experiences, vacations, and possessions in the long run.
The only two ways people really change their money habits
It's time for some real talk: there are probably only a couple of ways that people change their money habits for the better. The first is to completely bottom out, to be in such a bad place that continuing with business as usual is no longer possible. Nowhere to go but up.
I think we can agree that you don't want that to be the reason your story changes for the better.
The second way that people successfully build healthy financial habits is to start with something manageable and easy to repeat – and keep at it until it feels natural. This is the approach we'll take when you get started with financial planning.
If you've ever learned a new language or musical instrument, you know that it's really hard at first. It feels like you'll never get it right. But with time and repetition, you start to develop proficiency. Difficult things begin to feel manageable and even the really hard stuff seems a little more attainable. The same thing is true with your money.
If you're facing what seems like an impossible mountain to climb, start by looking for the best first step. Then evaluate and decide on the best next step. Then the next one, correcting as needed, then another and another and so on. A good financial plan isn't fixed in stone; it focuses on making the best decisions possible, then adjusting and correcting as needed based on results, circumstances, and life.
If you want to pay down your student loans, try adding an extra $10 to every payment. It's not going to eliminate that debt overnight, but it also won't break the bank. Want to save for a big vacation or build a nest egg for retirement? Start with something you know you can manage – maybe $20-50 per week – and build up those reps. The point is not to find a perfect map to get there all at once, but simply to get you moving in the right direction again and again.
Don't worry about being perfect, don't even worry about being good. Start with something you know you can do today and repeat tomorrow. Once that feels manageable, look for the next best way to get where you want to go. Then it's just rinse & repeat
What is financial planning & what's included?
There are all kinds of technical definitions for what financial planning is, but here is how I approach the process:
Identify the areas you want to improve
Use your values to define goals
Choose the best next steps to reach those goals
Take action
Pay attention to progress and correct as needed
It's as simple as that. Sure, there are sophisticated tools and software that we'll use along the way, but at its heart financial planning helps you prioritize what is important and take action to build live the life you want – now and later.
Here are some of the topics we address every single year as part of the financial planning process:
Liquidity – do you have enough cash and non-retirement investments?
Saving – are you setting aside enough to reach your goals?
Spending – are your expenses outpacing your income?
Taxes – we'll review your tax return and look for opportunities to save.
Debt – are you carrying the right amount of debt?
Investment risk & reward – do your investments match your goals and timeline?
Risk & insurance – are you adequately protected from manageable risks?
Estate planning – how can we make sure that the right things happen if you die?
Retirement account review – are you contributing the right amounts to the right accounts?
Financial independence progress – how close are you to making work optional?
We'll also make time at the beginning of each year to review your life as it stands right now. Has anything changed with you or your family? Will your income be the same as last year? Higher or lower? Any new goals or dreams?
Finally, we'll address any timely tax questions at the end of each year to make sure we are doing everything we can to lower your tax bill.
What about when something important comes up? We can absolutely meet anytime you need throughout the year. You can schedule meetings whenever needed to address a timely question or concern, review or update something we've previously discussed, let me know about a new development, or just because you want to make sure you're still on track. I want you to be comfortable with the pace while working together, so we can take it as fast or slow as you need.
What does it look like to get started?
The first few weeks and months of working together are definitely the busiest. Our first meetings will be focused on gathering your information in one place. This includes digging into the details of your financial reality, as well as learning more about what makes you tick.
Our first meeting will focus on the big picture stuff: your values, the life you want for yourself, and what drives your biggest decisions.
Our second meeting looks at the quantitative side of your financial life. This includes things like linking accounts, uploading tax returns, reviewing debt payments & insurance coverage, looking at your income & spending, opening investment accounts (as needed), and making sure we are on the same page. It's important for us to both have the same information before we look into building your financial plan.
Once I have a better understanding of what matters most to you and your unique circumstances, we'll touch on a few foundational topics: cash flow, saving, debt, and long-term investing. I believe that if you can get those four right, everything else that follows will become much, much easier.
From there we will dive into your most pressing concerns and decide on best next steps we can take to make sure you are on the right track.
How much time should you spend thinking about your money?
What's your number one money question or concern? How much time would you guess you spend thinking (worrying) about it in an average week? Better yet, how long have you been turning that issue over in your head without knowing what to do – or how to do it?
A lot of people assume that diving into their financial lives with an advisor will mean spending a lot more time thinking about money – which can be stressful. If you're all ready worried about your tax bill, saving for retirement, or paying for a child's education, won't sorting through those details be even more stressful and time consuming?
The reality is usually the complete opposite.
It might seem counterintuitive, but once you start taking action, building up good habits, and seeing results, most people actually spend a lot less time thinking (and worrying) about money. Sometimes even taking the very first step is enough to reduce stress and bring peace of mind.
Improving your financial health means prioritizing the decisions that will make your life better – however you define that. Part of my job as a financial planner is to make it easier to make & stick with those important decisions. Once we have a plan of action, many of the topics we'll address only need to be reviewed and updated once or twice a year.
Let's circle back to that question or concern you thought of a minute ago. What if you only had to think about it one or two hours a month, quarter, or year? And not because you're ignoring the problem, but because you already know that you're dealing with it? How would it feel to be that confident?
That's what we're going for in the financial planning process.
The most important service I provide
People often assume that the majority of work a financial planner does is all about left brain, tactical solutions to problems. Plug the right numbers into the right spreadsheets, pull out that financial calculator, and pow – you've got yourself a financial plan.
That is definitely part of the job, and it's really important. The technical side helps narrow the field to make more effective recommendations. It feels great to tell someone, "I ran the numbers and you are on track to retire on time," or "based on your current financial picture, you should be able to afford a new house." It's also incredibly important to be able to spot areas that need work and give concrete recommendations like, "you should be investing an extra $1,000 each month for retirement."
But all of that technical, left brain work is not really what makes meaningful change possible. The right brain, emotional side is where the rubber meets the road.
The most important service I provide is to give people a safe space to talk about money. Everybody – rich or poor, young or old – attaches emotions to the way they think about & use money. Sometimes those are positive emotions, often they are negative. When was the last time you received money you did not expect? Did that make you feel happy? Grateful? How about the last time you lost money you already had? What did you feel then?
Each lesson we learn about money (usually as children) carries some connotation of right or wrong, good or bad, responsible or irresponsible. Add in the fact that the one thing you absolutely, never ever talk about with other people is money, and what do you get? A lot of confusion, negative feelings, and stress – and no way to talk about it.
Let me assure you: this is a judgement-free zone. I'm not here to point out every little thing you could have done differently in the past, but to help you make positive decisions for the future. It's ok if you don't already know everything about money; no one expects that of you. (And, by the way: even people who know tons about money make bad financial decisions.)
I'm here to help you make better decisions for the life you want, period. Forget about should and shouldn't, right and wrong: let's focus on the best next step for you right now and leave the judgement out of the process.
All of the tools, tactics, and technical knowledge required for financial planning are super important. But the most important thing I can offer is to help someone feel more confident & empowered in their relationship with money.
Want a more detailed look at the kinds of questions we'll answer throughout the financial planning process? Please complete this interactive 21-Point Wealth Builder Checklist. This is a document I use with clients all the time to make sure they are on track to build strong & stable financial lives now and for years to come. It takes about 2 minutes to complete and is totally free. After you complete the checklist, I'll follow up with some specific insights on where to focus your time, energy, and money to get the most bang for your buck (pun absolutely intended).
Thanks,
Timothy Iseler, CFP®
Founder & Lead Advisor
Iseler Financial, LLC | Durham NC | (919) 666-7604
Iseler Financial helps creative professionals remove stress while taking control of their financial lives. We'll help identify current your strengths and weaknesses, clarify and refine your long-term goals, and prioritize decisions to improve your financial well-being now and later. Reach out today to take the first step.
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