In early 2008 I felt confident in my financial future. I was making good money at my job as an equity and derivatives trader, working for a large, well-established, financial firm that had been profitable every year for nearly a century. My wife was a full-time mom to our 3 young kids, who were heavily involved in youth sports, especially hockey. A couple of years earlier, we had enough extra cash to do a major home renovation and addition, and we had recently paid off our mortgage.
Just a few months later, the company I was working for collapsed, and our net worth plummeted.
As was typical in my industry at the time, most of my compensation had been in the form of an annual bonus. And a lot of those bonuses were in stock options, most of which weren't vested. After my company collapsed, my options were worthless. At first, it seemed like things still might be OK. The assets of my former company were bought by another large financial firm, and I was one of just a handful of people from my group who was kept on staff. But then the financial crisis deepened, and a few months later I was let go as well.
The long road back
At that point, my wife and I were scraping everything together. We mostly lived off our small remaining savings as I scrambled to find a new job. My wife got a part-time job as an administrator for a youth soccer club, which helped. We also scaled back our lifestyle, cutting out expenses such as our tennis and paddle tennis club. But we tried as much as possible not to let it affect our kids' childhood, so we prioritized school, hockey, and their other activities.
For the next 5 years, I had to recreate myself again and again. I started working for a smaller investment company, trying to build up my own book of business, which was very hard and paid little at first. I managed to find 2 clients who made up the bulk of my income for a while—and then one of the clients went under and the other one changed its business model and was no longer able to work with me. During this time, I wasn't able to save at all for retirement.
In 2014, I decided to change careers. I trained to become a financial consultant and started working for Fidelity. As I learned more about financial planning, it was like a lightbulb went off about my own life too.
The wrong priorities
Looking back, I can see how I should have prioritized differently. I should have built out protections first. My emergency fund should have been larger, especially because I knew my job could be unstable during times of market volatility. Especially if your industry is volatile, you may need to keep at least 6 to 12 months' worth of essential expenses in cash. Doing a house addition when we did was exactly the wrong priority—we didn't need the proverbial large home just because we had 3 kids. And we also didn't need to pay off the mortgage—the interest rate wasn't very high, and it drained the cash bucket that we needed to preserve against a large what-if scenario.
Also, when times were good, I should have been aggressively building my retirement funds. My job was all about a short-term mindset—minute-to-minute, day-to-day, with the stock market going up and down—and that was how I thought about my own finances. I knew I needed to save for a retirement that might be 30-plus years away, but I didn't really calculate how much I needed to save. I missed out on many years of compounding growth as a result.
The power of planning and saving
I've always believed in myself, and I believe in the work I do now at Fidelity. Everything we talk about every day—planning, retirement, emergency funds—it all applies to me too. For the past decade I've taken every advantage to defer compensation into any retirement vehicle I can. Thanks to diligent planning, I am now on a very solid track to retirement. Unfortunately, I can't go back and talk to my younger self. But I can teach my kids, now in their 20s, what I didn't quite understand at that age. And I can share my story and hope that it might show others why planning is so important. It's never too late to start!
