The holidays are over and it’s back to reality. For those who managed their finances well over the holiday period, the only regret is that they have to get used to waking up at six every morning and face the traffic jams once again. Those who spent recklessly however will have to go through one or more months of agonizing brokenness. Yes, it is payback time.
Probably because how we manage our money has such a profound impact on our standard of life, one of the most popular new years resolutions is to manage personal finances better and save more. Implementing this resolution most often proves to be a daunting task.
Information about personal finance is everywhere; in magazines, on television, radio, books, the internet and even in church. It is no longer a situation where there is no information, rather one where there may be too much to digest and the options offered are as numerous as they are bewildering. To make it worse, salespeople of financial products hiding behind titles like “Financial Advisor,” “Financial Planning Manager” and so on add to the confusion as each tout their product as being the most appropriate. In today’s environment, having an independent, fee-only financial planning professional working for you and guiding you through the financial labyrinth is essential.
A financial planner is a professional trained to analyze your financial situation, help clarify and quantify your realistic goals then develop a plan to achieve these goals. Most people have goals which compete and even conflict with each other. The planners job is to develop financial strategies to utilize the resources available to achieve your major life goals thereby enabling you live a better life both today but also in the future.
The quality of advice you get is critical. One of the saddest things is to follow advice of an uninformed person or even worse, from someone with something to gain if you do as they say. If you have ever made an investment thinking that you taken care of a goal (such as higher education expenses for your child), only to be horrified years later when you discover that the investment is not adequate to fund even a fraction of the cost, you understand what I mean. Remember anybody who is paid either a salary or commissions for selling products cannot give you unbiased advice. No matter how much they assert that it is only your interests that they have at heart, human nature always prevails. Do you think that they would keep their job for even a month if they gave free advice to all and sundry but never made a sale? If you really want to know where their loyalty lies just recall the adage; he who pays the piper calls the tune. It is important to remember that the advice they give is not free, it is just that the fees, often exorbitant, are hidden in the price of the investment you make.
In selecting your independent, fee-only financial planner, ensure that they have professional qualifications and belong to a professional organization. This is the only way you can be sure of their competence. This advisor will help clarify your financial position, identify products or services (if needed) to help you achieve your goals and help you track your progress over time. The fee he or she may charge is well worth the cash flow savings, investment gains, tax savings and most of all the confidence that you are taking the most prudent steps to secure your family’s financial future rather than groping in the dark and hoping for the best.
Implementing your new year’s resolution can be a lot easier if you get the help of the appropriate professional. Educating yourself about personal finance issues will enable you choose that professional. As Warren Buffet once said “The market helps those who help themselves. But unlike the lord, the market does not forgive those who know not what they do”.
© Manyara Kirago, RFC®, CMFC®