fizkes | iStock | Getty Images
For anyone getting started with adulthood, the financial stuff can be among the trickiest aspects to navigate.
That can be the case even for those who go on to be financial advisors.
For these professionals, some advice they regularly give clients now — after years of extra education and real-world experience — were unknown to them when they were younger. And there are some key things they would tell their younger selves if they could.
More from Empowered Investor:
Here are more stories touching on divorce, widowhood, earnings equality and other issues related to women’s investment habits and retirement needs.
For instance, certified financial planner Marguerita Cheng said she headed into adulthood knowing that she should save money — i.e., put it in a savings account — but investing those funds in the stock market was not on her radar at first.
“Today I’d tell my younger self, ‘It’s great that you’re working and putting money in savings, but be sure you understand the difference between saving and investing,'” said Cheng, CEO of Blue Ocean Global Wealth in Gaithersburg, Maryland.
“You build wealth by investing,” said Cheng, who serves on CNBC’s Financial Advisor Council.
Regular savings accounts generally pay interest rates that aren’t keeping up with inflation, which was an annual 8.5% in March (far above the Federal Reserve’s target rate of 2%). This means money left in cash loses its purchasing power over time. In contrast, the stock market has averaged about 8.3% annual gains over the last 30 years, after accounting for inflation.
Meanwhile, there are also lots of good reasons to have money in savings in case of emergency.
CFP Diahann Lassus, managing principal at Peapack Private Wealth Management in New Providence, New Jersey, learned a big lesson from having nothing set aside when she was a young adult.
I learned you have to plan ahead and focus on what might happen instead of spending everything you have today.
Diahann Lassus
Managing principal at Peapack Private Wealth Management
Lassus had to learn how to replace a busted water pump in her car’s engine by herself because she couldn’t afford to pay someone to install it — and she needed her car to get to work.
“Set up an emergency fund,” said Lassus, who is also on the CNBC FA Council. “I learned you have to plan ahead and focus on what might happen instead of spending everything you have today.”
Advisors generally recommend stashing away at least three to six months’ worth of living expenses.