Managing your personal finances can be quite tricky, especially when it comes to getting out of debt and increasing your savings. Taking 10-15% out of your monthly income and putting it to the side for ‘rainy days’ or big purchases is something that all financial advisors recommend.
What if you simply aren’t doing good when it comes to tracking your expenses and saving money on a monthly basis, though? In that scenario, it may be time to go ahead and hire a financial advisor.
Next, we will discuss when it is the right time to do this, as well as how an advisor can help you. Let’s get to it!
What Is a Financial Advisor?
If you are looking for a short definition of this term, then it would be a professional who will help you manage your expenses, make investments, and create an emergency fund. A financial planner is someone who can help you successfully use money as a tool to achieve your short and long-term goals.
Hiring a financial advisor can help you in many ways, including getting better educated on all of the different types of insurance that are available, as well as how much money you should be saving based on your income and what are the best investments to make. Only with proper planning will you be able to have enough money to finance your goals without going into debt, whether that is a new home or going to college.
In the first step of the process, the professional you have hired will ask you about important information on your liabilities, expenses, and income on a monthly basis. Not only that, but you will also discuss the amount of money you currently owe, as well as information about the bank or any financial organizations that you are a part of.
In order to give you effective suggestions on how to manage your money better, they need to know every little detail of your financial life. That includes the projections that you were thinking about for the future.
The main role of a financial advisor is to help you create a steady plan that involves methods to settle your debt and cover your regular expenses, as well as be able to save money on a regular basis. Also, once you put this into action, the advisor will monitor the process and be ready to step in and give you answers or additional tips if you have issues with the created plan.
Finding the Right Financial Advisor
This all depends on what you are looking to get help with. If the only issue that you have is related to paying your taxes, then hiring a Certified Public Accountant should be more than enough. However, if what you are looking for is tips on effective money management, as well as help with the investments that you are planning to make, then you should be looking for a certified financial advisor.
The first thing that you should know is that there are two main categories of financial planners – those who charge a fee and those you will have to pay a commission to. In the first case, you will determine a fixed hourly or project rate. When it comes to the commission, it is a percentage of a purchased financial product or a made investment. Keep in mind that, in some cases, there is also a combination of the two methods with the fair fee considered to be around 2%.
When it comes to evaluating the professional, you should be informed on the three different certifications that an advisor could possess – Chartered Financial Analyst; Certified Financial Planner; Certified Financial Consultant. If you are looking for someone who can help you create a general plan for managing your finances you should be hiring either the CFP or CFC, as the CFA professional is more for specific projects.
When Is the Right Time to Hire a Financial Planner?
If you ask us, it would be great if we all were able to have some sort of financial help, whether that comes in the form of a call on a monthly basis or consulting on a weekly basis. However, the price of these professionals is quite high, as they have to make a profit, as well. This is why you may be interested in learning when the right time to hire a financial planner is in order to make the most out of your money.
There are a couple of red flags that could guide you in hiring a financial planner. The first one is that you are feeling lost when it comes to managing your finances, and you find that you are in constant debt without being able to save any money on a regular basis. This is one of the greatest signs that you should seek out professional help in order to consolidate your budget and move on with your plans by investing in funds that could yield interest on a monthly basis.
It can also be the right time if you simply aren’t someone who enjoys or is confident with financial planning. Not everyone can be successful at everything, which is why hiring a professional that will monitor your expenses and advise you on how you can cut your costs in certain areas can be essential.
Last but certainly not least, it is a good time to hire a financial planner if you already have some form of a financial plan but you aren’t sure how to put it into action, or you would simply like the help of someone who has more experience and formal education. An opinion from a third party who is objective can be crucial for making little changes that can determine the future of your projections.
Wrap Up
So should I get a financial advisor? There is nothing wrong with searching for professional help when it comes to financial matters. Yes, hiring a financial advisor can be pricey, but in the long term, it is a move that can help you save money and make investments that will earn you a hefty profit. Good luck!