By Niharika Dangarwala
Financial planning can be a daunting task, but with the guidance from the Spring Speaker Series hosted by Chet Bandy, a safe and secure future is not as difficult to achieve. Chet graduated from the University of Illinois with a degree in Finance and as a member of The Hoeft Technology and Management Program Class X. He currently works at Northwestern Mutual as a Wealth Management Advisor.
Chet’s presentation was broken down into a few key points: protect, optimize, and grow. To begin, I wanted to highlight the idea that our greatest asset is our income. No future investment or other capital will compare to the amount of money earned through working in our lifetime. Because of this, Chet stressed the importance of protecting your income through emergency funds and life insurance. It is almost impossible to predict emergencies, however large or small they may be. As several people have seen during the current COVID-19 pandemic, emergency funds are crucial to support yourself through hard times. Generally speaking, these funds should contain a minimum of three month’s worth of expenses and a maximum of 12 month’s worth. Any more than that, and you could potentially have funds idly sitting in a savings account earning little to no interest. Lastly, Chet spoke about life insurance, and how important it is to purchase a plan while you are in favorable health. Whether it is term or permanent, life insurance is extremely helpful to support your family in the future.
The next point that Chet covered was optimization: using your income towards the best possible resources (a.k.a.: budget, budget, budget). While discussing fixed and discretionary expenses, Chet emphasized the idea of recapturing cash flow, either from paid off debt, bonuses, or raises, and putting that money towards other goals. It is incredibly easy to put extra money towards discretionary expenses and spend it almost just as fast as it was earned. Learning how to budget can be difficult, but there are so many resources available to get us started. One easily accessible resource is Northwestern Mutual’s monthly budget sheet that can be found on their website. The point to remember, though, is that the only benchmark that matters is whether you are on track to reach your goals. Comparing yourself to others does no good, in and out of financial planning.
The final point that Chet covered was growth, specifically centered around investment. With respect to an individual’s 401k, Chet stressed the importance of participating at the level of the employer’s match and leveraging the ROTH option if available. Transitioning into investments, Chet’s four beliefs were simple: stay in the market, don’t time the market, diversify your assets, and get the highest return for the risk you’re willing to take.
This was the first Spring Speaker Series event I attended as a member of T&M, and it is one I will not forget. To be honest, it was my first real exposure to financial planning outside of my consumer economics class in high school. Listening to Chet speak about financial security was overwhelming, but incredibly informative. Aside from leaving that meeting with the newfound confidence to throw the words “ROTH IRA” and “diversification” into every sentence I could regardless of the context, I learned so much. Chet inspired me to do my own research about my finances and start planning for the future. It’s never too early to begin! As John Quarton said, “most of you are going to need help managing all that wealth you are about to accumulate,” and he’s right. Attending this workshop was one step in the right direction for myself, and several of my peers, towards a bright and successful future.
Niharika Dangarwala
Niharika is currently a sophomore studying Bioengineering and is a member of T&M Class XXVII. She is an incoming intern at PSYONIC.