One Thing Worth Spending Money On

I’ll be the first to admit it: I’m thrifty. I hate spending money on things I can do myself. Thanks to YouTube videos, I’ve learned to replace toilets, cook gourmet meals and do countless other things that I used to pay other people to do. I’m a self-proclaimed DIY expert.

When my aviation career finally started paying off, and I transitioned from a regional to legacy carrier, I wanted to learn more about how to achieve financial independence, so I started buying financial planning books on Amazon. A sure-fire way of ensuring long-term financial success, right? Fortunately, after reading countless books, I purchased The 5 Mistakes Every Investor Makes and How to Avoid Them by Creative Planning’s CEO, Peter Mallouk. It was only after reading this book that I realized my thriftiness and desire to do everything myself was actually working against me.

This industry makes us paranoid.

If you’re a fellow pilot, you may be familiar with the phrase, “This is the best job in the worst industry.” Whether you are in your first decade of flying or your fourth, there’s no such thing as job security in the commercial airline business. As we just witnessed during the COVID-19 pandemic, even the most senior pilots can lose their jobs when airlines are shut down.

If you, like me, lived through the post 9/11 period from 2001-2011, stagnation, furloughs, bankruptcies, pay cuts and slow economic growth may have had you second guessing your career choice. Is it any wonder many of us are skittish about making large purchases or spending money on anything that’s not absolutely necessary? The industry we work in has so many uncertainties that it’s hard not to be paranoid.

There’s no such thing as a free lunch.

When has anything free also been good? We hear the phrase, “You get what you pay for” all the time, yet we continue to flock to anything provided to us at “no cost.”

For example, our union retirement and insurance committees, as well as our retirement plan administrators, provide a lot of free information, which is all good and helpful. The problem is that it is intentionally designed to be very basic. Why? For one, it needs to apply to all employees. Also, the committee members and plan administrators are not professional financial advisors, so they are only permitted to offer information about general savings and investment topics, not specific recommendations based on each pilot’s personal financial situation.

In addition, much of the material is designed to minimize potential losses for participants which in turn helps minimize potential losses for the committees/plan administrator. They are required to provide enough information so employees have a basic understanding of the plan provisions and investment topics which also happens to help minimize the risk of legal action against them by the union or company employees. When viewed from this perspective, the “free” guidance could end up being very costly in the long term.

There is such a thing as being too cheap.

This was a difficult concept for me to grasp. The smart thing to do is save every penny, live below my means and educate myself as much as possible about savings and investing concepts, right? Surely, I thought, the information gleaned from reading a wide range of financial literacy books, combined with the free guidance provided by my retirement plan administrator will provide me with the information I need to manage my own finances. Sadly, not only is that line of thinking wrong, it can be downright detrimental to an individual’s long-term financial health.

Despite all my best efforts, I simply didn’t know what I didn’t know. When I finally read Peter Mallouk’s book, it was a wake-up call. I realized I had literally made every one of the five mistakes he warns against. Despite all my reading, I was embarrassed and extremely frustrated to realize I was doing it all wrong.

It’s okay to seek outside assistance

As pilots, we are often experts at compartmentalizing things. We leave our personal problems at home when we come to work, we use the CRM to handle emergencies, and when there’s a problem to solve, we take charge. Add to this a bit of paranoia that comes with working in the industry, and it can be incredibly difficult to seek outside financial planning assistance.

It is my hope that by sharing my experience and failed attempts at managing my own finances, other pilots in similar situations will realize it’s okay to seek outside assistance. Being thrifty is good, but there are things in life that are worth spending money on. Quality financial advice from an experienced team of fiduciaries is one of those things.

Steven Lofgren is a Captain on the Airbus A320 for a legacy airline and a member of the Aviation Financial Freedom practice development team. He supports Creative Planning’s Aviation Financial Freedom specialty practice by building bridges between the aviation community, with its specific financial wellness needs, and the firm’s comprehensive approach to financial management.

This commentary is provided for general information purposes only and should not be construed as investment, tax or legal advice, and does not constitute an attorney/client relationship. Past performance of any market results is no assurance of future performance. The information contained herein has been obtained from sources deemed reliable but is not guaranteed.