Most people hesitate to use a financial planner to help them manage their finances. They often think, “Our parents managed their finances all by themselves. They never took advice from – far less hired the services of – a financial advisor!” And therefore, people attempt to manage their earnings, their expenditures, their taxes, and their savings, all by themselves! They fail to realize that things are a lot different today than they were when their parents managed their money.
Nowadays, people frequently run out of money. With spending traps everywhere, they often end up spending more than they earn. A recent article in the National Public Radio highlighted that a majority of today’s working class doesn’t have a personal financial planner. Therefore, many of them don’t realize that their expenditures are frequently running far greater than their earnings. This is the primary reason most people end up deep in debt.
Given the frenetic pace of life today, not to mention the overwhelming demands at work, people do not have the energy, time, or temperament to keep tabs on their finances. Moreover, markets today are flooded with investment schemes, savings plans, retirement options, etc. How does one know that the investment option they chose to put their life’s earning into isn’t a Ponzi scam? No doubt, the internet is a vast resource of knowledge, and those who are interested can take the time to pour over all the technical jargon. However, investment products today can be extremely complex. You can go ahead and buy investments that you don’t fully understand, only to realize later the risks you underestimated.
In the vast, intricate world of money, unless you’re a suitably qualified professional, managing your own finances is akin to standing by a ticking time bomb. Financial planners help you see what you don’t or are unable to see. In only half a dozen meetings with their financial planners most people are surprised, often shocked, that instead of working their way out of debt, they’re actually getting deeper into it. A thorough financial plan helps uncover many important financial details that people don’t ordinarily comprehend. A financial planner helps one see their financial situation in clear light, and then suggests the best possible course of action to meet one’s financial goals.
Financial advisors may not provide specific investment advice – invest in this stock, or that fund. Instead, they help organize one’s financial life, evaluate risks, and help with asset allocation and diversification. They can even tell if you have an investment that’s underperforming or is too much risk.
Financial planners can help you structure your investments based on your financial goals. For instance, a young couple will want to plan to save for the arrival of their children, their schooling, college, and finally retirement. A financial planner will help put all of their life’s goals into perspective, to make sure that they’re able to save sufficiently to meet all of their goals, and yet be able to live life comfortably.