When it comes to financial planning, many people seem to just bury their heads in the sand and hope for the best. There is so much information available through the Internet, cable networks and how-to books that it can be overwhelming, with the result that you end up doing nothing.
A little education can give you enough confidence to take the first step or to remain steadfast in moving toward your goals. Let’s review some basic information about saving, investing and spending.
Certified financial planners can help you put your financial house in order. No, they won’t balance your checkbook, but they will help you set some realistic financial goals in regard to budgeting, saving for a rainy day and your retirement. A financial advisor can also give you a serious reality check about debt – how to avoid it, or how to dig yourself out of it. In addition, some financial advisors can provide advice on basic insurance needs and even make recommendations regarding such investment avenues as mutual fund picks. Beware: anyone can call himself or herself a financial advisor; look for industry designations such as CFP (certified financial planner). Be prepared to spend between $125 and $165 an hour for the assistance of a financial planner.
Once you have accumulated between $75,000 and $100,000, it’s time to contact an investment manager, wealth advisor or money manager. The primary job of these individuals is to make sure your money is working for you and that you are receiving the best return on your investment, i.e. stocks, mutual funds, bonds and cash investments. Investment managers generally make specific recommendations in regard to your wealth.
After an initial evaluation of your lifestyle and your ultimate financial goals, some will take over your assets completely so you don’t have to think about it. If you have sizable assets, wealth money managers will also coordinate with insurance, tax and estate-planning experts to round out your financial planning. Plan on paying an annual fee for the services of an investment manager, based on the size of your portfolio. Beware: look for a manager who will provide you with personalized attention and customization, no matter the size of your portfolio.
If you choose to go it alone, explore the option of online financial planning. Many services offer worksheets, educational information and software that can help you organization your finances. But, organization is the key word here. You have to keep up with the “paperwork” on a continual basis.
To find the right financial professional for your specific needs, word of mouth is usually the best way. Ask friends and family. Ask individuals who are currently in a tax bracket well above your own. Remember, they got there somehow, perhaps with assistance from a trusted financial expert.
Now for a few quick tips to get you started or to remind you to stay the course:
Pay off your unsecured debt. Make more than the minimum payment each month.
Get a copy of your credit report and immediately correct any inaccuracies.
Save as much as you can. Start early, but remember, it’s never too late to start.
A 401(k) is one of the easiest and best ways to save for retirement.
Set realistic immediate financial goals, but dream big so your financial plan reaches for the stars.