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Basic Financial Planning Part 2

Episode 4: This is the second-half of a discussion with Certified Financial Planner Jeb Jarrell on basic personal finance and financial planning. This discussion will outline the elements of a personal financial plan, relevant to any young professional. We’ll discuss workplace benefits, retirement planning, tax planning and investment management. Let’s join Jeb to learn more.

Note: To listen to the first-half of this discussion, click here for Episode 3.

Maximizing Your Workplace Benefits

Employers often allocate part of their budgets to fund your benefits, in addition to your salary. You want to make sure you are taking advantage of this opportunity to maximize your workplace benefits. Don’t leave money on the table.

If your employer offers a 401(k) or other retirement plan, you can probably receive a match for funds your contribution to that plan. In essence, it’s similar to a pay-raise they’ve already allocated for you.

Life insurance is another key component of your benefit package. Company provided policies are often very inexpensive or even free. You can add to the coverage to significantly increase your family’s security. Dental and vision plans are also extremely affordable and available to fit your budget.

Group disability insurance plans can provide an important safety net, should something happen to you.

Health insurance offerings differ. Make sure you pick the right plan, based on your needs and those of your family. Be sure to take advantage of a Health Saving Account (HSA) or FSA. The FSA funds have to be used by the end of the year. Funds contributed to the HSA can rollover and grow via your contributions.

Retirement Planning

This is a critical plan to have in place. What is your ideal life, after retirement? You want the freedom and financial ability to enjoy these upcoming years. A solid plan will enable you to take advantage of interests such has travel, furthering your education, investing in hobbies, etc. It’s never too soon to begin planning and contributing to that plan.

Even if you have a 401(k), there are other components you need to consider establishing and funding, as well. There’s a general priority to how you want to approach them.

The 401(k) is the first component, because you can take advantage of the company matching contributions (“free money”).

If you qualify, funding a Roth IRA is the second component. It uses after-tax money, so it grows tax free). Young professionals generally have this Roth option. It phases out, if you hit a certain income level. The advantage to funding it now is that you tax bracket is generally lower, so you’ll realize a bigger savings.

Funding a traditional IRA is the third component. It uses pre-tax money. You’ll receive a tax deduction, but the growth will be taxable, once you begin taking distributions.

The Health Savings Account is the fourth component. Once you reach the age of 65, you can withdraw funds for retirement, even though the HSA was originally for qualified health expenses. It will be taxed similar to a traditional IRA.

Tax Planning

Remember to make your retirement account contributions. These can have positive tax advantages. Hire a good CPA. They can provide good advice to help you make changes to reduce your tax liability. Be sure to take any student loan interest deductions and mortgage interest deductions.

Investment Management

As discussed in the previous episode, some people are interested in the hot stock to get a big jump in value. Jeb doesn’t take this approach. It’s about having a solid plan that grows with limited down-side risk. The younger you are, the longer your time horizon. Beginning earlier takes advantage of compounding interest.

Be sure to watch your expenses. Don’t overpay for financial advice and related fees. Your advisor should be transparent with his/her fees.

Avoid trying to time the market. There are too many variables to get this right, consistently over time. Be consistent with your investment contributions and make sure you have the best allocation for your risk-tolerance.

It’s not about waiting on retirement. It’s also about enjoying the journey. This is why Jeb uses the phrase, “Maximize Your Return on Life.”

Did You Like What You Heard Today?

As we wrap up today’s episode, we want to encourage you to subscribe, so you don’t miss upcoming episodes.

If you’d like more information about Jeb Jarrell and his firm, visit Jeb’s website at You can also follow him on Facebook.

Thanks for listening!


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