I was having a conversation with a friend of the firm today, and we ended up talking about people who found themselves in unfortunate situations due to a lack of financial planning. Do you know what the most interesting take-away from that conversation was? It was how a decision that seems innocuous (or even good) at the time can blow up into a financial mess.
Since I’m a financial planner, I get to hear a lot of “take responsibility for your actions” talk. In all this personal responsibility chit-chat glosses over the fact that it’s unreasonable to expect the layperson to know the long-term financial consequences of a perfectly reasonable action. For example: let’s say a person has trouble paying their bills. They negotiate with their credit card company and have a portion of their debt forgiven. Good for them! Now, how could the average person be expected to know that they’ll receive a 1099-C tax form showing the forgiven debt as income? Now, it’s not too destructive if it’s $700, but what if it’s $13,000? Talk about sending people who tried to make the best decisions they could in a tough situation into a tailspin.
There are too many situations like this to name. So, when is the best time to have a financial planner on your side? Before you think you need one. The second best time? As soon as you realize you need one.