Setting Yourself Up For Success: Financial Planning For Your Home Project

This post is in partnership with Northwestern Mutual. As always, all opinions are our own!

Last month we shared our road to homeownership—one that was riddled with mistakes and second guessing and occasionally staring a little too long in the mirror mouthing the word “why?” over and over. It was a stressful process, mostly because we didn’t have a professional to work with on meeting our goals and so our instinct was to deprive ourselves of pretty much every discretionary expense and put it all in a savings account. We didn’t think that home ownership so early on in our lives would be a possibility for us and it always felt so out of reach, so we unfortunately delayed waiting to talk to a professional financial advisor, which is something we now wish we’d done years ago.

As first-time homeowners in an uncertain economy, we decided it was time to make the leap and meet with a financial advisor at Northwestern Mutual — who is also now our new best friend. Our meeting felt almost like a therapy session, where we could openly discuss our feelings about money, our future, and our current financial standing while we’re in the midst of a major home renovation.

We know from our own past experience with interior decorating clients and Matt’s real estate clients that home renovations often cost way, way more than you’d expect. Most likely, the initial cost will give you sticker shock all by itself, but if you move forward there are other things that come up that you may not expect—like change orders, unexpected expenses (oops a pipe exploded!), and the potential need to expand a project’s scope. For us, we personally take the higher-end amount we expect to spend on a project and double it, just to make sure we’re able to pay for anything that comes up along the way. If we can’t quite meet that final high end number, we feel better just waiting until we can before diving in. And on that note, if that final number means we’re putting way more into our home then we could reasonably get in resale after the work is done, we feel more comfortable adjusting the scope to make sure we’re not creating a Very Beautiful Money Pit.

Our Northwestern Mutual financial advisor kind of helped flesh out that idea by showing us what things need to be in place before you even begin to take on a project like a major home renovation, which really helped put together a more tangible road map to a project like this. Our financial advisor fittingly used the analogy of building a home as a way of illustrating financial stability. Start with the foundation—things like responsible debt management, emergency funds, and any insurances that will be a safeguard from slipping into uncertainty in case of misfortune, like death or disability.

We learned that once all that’s in place, we can begin to “frame” our financial “home” with things like money market accounts, investments, businesses, and projects like home renovations. We were incredibly happy to discover that we’d basically already built our foundation by paying off high interest debts and creating an emergency fund, but that something like life insurance or disability insurance may be worth exploring to make sure we keep that foundation strong.

We both left the meeting feeling incredibly encouraged, which was honestly kind of the opposite of what we expected—money talk has historically stressed us out so much! But talking about it with someone who has the skills to help you plan for a healthy financial future gave us a good sense of security. It was incredibly refreshing to just be able to blurt out “I don’t understand what life insurance is and I’m only 27 do I really need this?!?!” and have someone explain it in full and be able to answer follow-up questions. Taking into account our current income, we learned what we should have saved away for emergency funds, a roadmap to tackling “bad” debt and keeping “good” debt, and all of our options for things like IRAs, investments, and insurances.

Through all of the ups and downs of this year, knowing that we’re on the right track for spending and saving while we renovate our home was a huge relief, and learning about different ways we could possibly invest any extra liquid assets moving forward was extremely helpful. I really can’t overstate how positive of an experience it was, and how confident we feel now even during these uncertain times.

Last time we posted about Northwestern Mutual, we had some folks ask about the exact cost structure, so we made sure to discuss the full spectrum of financial planning service fees during our meeting. The advisor we met with works on a commission-only basis, which means we pay nothing directly but if we choose to purchase insurances or makes investments through them they make a commission on that. As people totally new to using these services, that feels like a great system for us and anyone else who would rather not pay on the front end. There are also flat fee-based financial advisors, which means you’ll pay them a fixed rate for their services.

Overall I’d say we’re beyond thrilled to continue working with Northwestern Mutual  to help make our dreams a reality. Particularly as people who have continued to expand our business and income, working with a financial advisor has so far made us feel incredibly secure that we’re putting it all to good use and spending intelligently.

Thank you so much for stopping by the blog, and please let us know if you have any questions about this whole process!

xoxo Beau & Matt