Personal Finance: The Not-So-Secret Ingredient to Wealth Creation

Back in time, when savings could be kept under a mattress or accessed through a simple savings or checking account, it was a lot easier to grasp the components of personal finance. But today it’s no longer sufficient to understand the difference between saving and investing, or even the discipline required to stick to a household budget.

In our fast-paced and ever-expanding modern world of finance it has become essential to include insurance coverage, mortgage affordability and the importance of keeping a clean credit report. Then there are investment options to consider, from bonds and stocks to real estate, mutual funds and even digital assets like non-fungible tokens (NFTs).

Getting a grip on your personal finance; how you plan for your future and manage your money, is the foundation of any future wealth success.

It starts by marrying your personal goals and ambitions with the reality of what is in your bank account, your disposable income, tax obligations, family commitments and estate planning requirements.

What Does Personal Finance Entail?

The core goal of personal financial planning is to help individuals and families meet their individual financial goals over the short, medium and long term, and in step with each new life phase. There is absolutely no point treating the personal finance ambitions of a 70-something Baby Boomer the same as a 30-something Millennial. Nor does a business owner’s needs mirror precisely those of a single parent family.

Personal finance planning starts by asking questions, understanding the raw material each individual has to work with, and tailoring an effective plan to help achieve their ambitions.

Typically, drawing up a budget that helps to streamline spending and builds in savings goals is the best place to start. Guard against overspending, keeping goals in mind and ensuring that emergency fund buffers are built up to deal with unexpected expenses. The aim is to create a habit of saving, a mindfulness around leaning on debt and an ever-present carrot in the form of your personal dreams to motivate and guide you.

Here a professional advisor can step in to help you build a plan that takes into account all aspects of your financial universe. Retirement needs to come into play, as does saving for your child’s college education.

Finding the best ways to maximize tax savings is a must. Or how about building towards that one-in-a-lifetime vacation or a bigger family home? A professional will help you prioritize these goals, find practical ways to achieve them and keep you on the straight and narrow if you veer off course.

Why Professional Financial Advice Matters

In the USA, particularly in the African-American and Hispanic communities, the need for personal financial guidance and education has never been more critical. As a wealth management firm committed to building financial empowerment, we see the clear link between lower personal finance knowledge and wealth accumulation.

We also appreciate that a lack of trust in the wealth management sector and Wall Street has held many minority households back from reaping the benefits of structured financial planning and expertise. This, in turn, results in slower wealth creation within these communities.

Make no mistake, personal finance education is essential to every individual. But it is particularly lagging among African Americans who, according to a 2019 study, fell way behind their white counterparts when it came to a basic understanding of financial matters. Accessing professional guidance is just one way to narrow this gap, increase financial literacy and spur on wealth creation for all.

Understanding the Financial Advisory Ecosystem

There are any number of certified professionals you can turn to who have the skills to safeguard your personal finances. They can build a strong portfolio of assets, set yourself up for a comfortable retirement, or build a legacy to pass on to future generations. What is important is that these individuals are accredited, trustworthy and suited to your needs.

Let’s explore just a few options on the table:

Certified Financial Planners

Only financial planners who have the training and experience to carry CFP® after their name are required to operate and uphold the rigorous professional standards required. CFP®s, such as Felton & Peel, carry a fiduciary responsibility to always act in the best financial interests of their clients, or they risk sanction and possibly losing their certification. We recommend first checking out any financial planner on the Certified Financial Planner Board of Standards’ database.

Wealth Managers

Individuals who fall into the category known as ‘high net worth’ (who have at least $1 million in liquid financial assets) usually have extremely complex financial needs, which also extend to areas like philanthropy, offshore investing and strategies for transferring wealth to the next generation. Financial planners offering this service level should ideally be CFP®s and fiduciaries.

Investment Advisors

Investment advisors come into play to help you manage your investment portfolio. These professionals also have a fiduciary duty to their clients and must be registered at the state level. Furthermore, if they are at a firm that manages $100 million or more in client assets, they are required to register with the Securities and Exchange Commission as a Registered Investment Advisor (RIA).

RIAs such as Felton & Peel are registered as independent firms, which means we have the freedom to create unique financial plans that are not dependent on affiliations to other companies or brands. This means more choice for you, and fewer restrictions.

Taking the First Step Towards Financial Freedom

Self-education, along with taking responsibility for your finances, is one of the most important elements when it comes to getting your financial future under control and in shape.

Just reading a blog like this is a great place to start challenging your ingrained views about money and wealth. The next step is to get an experienced coach in your corner.

Since money – and how you manage it – is central to this partnership you have to feel comfortable with the person who will be guiding you on this journey. This is why we always recommend shopping around, having a few discussions with various companies and professionals and getting to understand their ethos and approach to wealth, as well as their humor and values.

At Felton & Peel, we strive to inject joy and confidence into your financial journey. We achieve this by instilling integrity and passion in all we do for the benefit of your financial future. We’d love to apply our approach to your personal finance concerns and work together to unlock unique and effective ways to reach your goals. Connect with us today.

Malik S. Lee, CFP®, CAP®, APMA®
Malik Lee is the Managing Principal of Felton & Peel Wealth Management. A CERTIFIED FINANCIAL PLANNER™ with more than 15 years of financial services experience, he is a Guest Lecturer at Morehouse College, serves on the CFP Board Council of Examinations, and is a Board Member for the FPA of GA.
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