Do you need a financial planner?
Since I’m a big fan of DIY, readers are often surprised that I’m not totally opposed to seeing a financial planner.
This drives some people bananas: Shouldn’t you manage your own money?
Yes, of course you should! Just like you should exercise on your own. But you might seek out a personal trainer to prepare for a big goal, like running a marathon or looking amazing at your wedding. Or, you might just want a fitness plan you can follow on a regular basis.
Similar to a personal trainer (but usually sans the six-pack abs), a financial planner can put you on track to meet your goal. Maybe you’re finally ready to figure out if you invested wisely in your 401(k) or to learn what the heck a 401(k) even is. Or you’re about to start a family and want to open a 529 college savings plan. Or maybe you just want to find a strategy for managing your money better.
A friend of mine recently saw a planner who showed her how, in five years, she’d be able to afford her first house. Now, whenever she’s tempted to go out to a fancy restaurant or buy a new dress, she instead visualizes her future home and tries to make the wiser decision. Sometimes it takes an outside expert eye to show you how to achieve what may seem impossible.
If you’re interested, I suggest you find a fee-only financial planner, someone who is paid by the hour (usually $100-$250/hour) and not by commission, through Garrett Planning Network or NAPFA: The National Association of Personal Financial Advisors. The planner can help you figure out where your money is going, where you’re spending too much on fees, and what it will take to realize your goals.
So what about those folks who can’t or don’t want to spend on an advisor? Your job is to be your own financial advisor. Here are 5 ways to get started:
- Track your spending. Create an account at mint.com for automatic tracking and a pie-chart view of where your money’s going, or keep a spending diary the old-fashioned way in a journal. Note if you’re spending on things you love and need, or things you could do without.
- If you have debt, pay it down, starting with the debt charging you the highest interest rate. If you have student loans, study up on repayment programs.
- Aim to set aside six months worth of living expenses in a savings account.
- If you have a 401(k), check out the website financialengines.com to see how to allocate your money.
And if you’re deep in debt and overwhelmed, don’t despair—expert help is available to you, too. Two places to start looking are the Association of Independent Consumer Credit Counseling Agencies and the National Foundation for Consumer Credit.
Regardless of your situation, here’s to taking charge of your money and getting in financial shape!