I am yet to meet someone who doesn't want to make money, need money or wants money. Some people use financial advisors to access their financial health and their level of risk(s) in investing. Regardless of your financial status, we all need to understand that the world runs on money. Hence, it is advisable to know a thing or two about your financial health.
On a micro level, you get paid salary or hourly; maybe you work for yourself (C.E.O, Business owner etc). You cannot skip the relevance of finances on a micro level. In that, the micro management of your finances projects your macro financial behavior. If you live from paycheck to paycheck or just starting out in life, make sure to have:
1. Concise monthly itemized budget: This will help you organize all your expenses for the month. It puts you in control and helps drive your financial sanity.
2. Be aware of your purchasing habits: Do you buy/shop for wants or needs. Minimalism is the new way to go if you have tight monthly budget. Weed out all your wants; wants should completely be eradicated under unconducive budget atmosphere. There are some needs that may not be a necessity. Ask yourself, can I wait next month for this specific need or do I need it right away.
3. Avoid bank account (Checking or Savings) overdraft fees and credit card late payments: You need to avoid your checking/savings account(s) to be overdrawn. Banks charge $35 for overdraft fees per an overdrawn item and $30 sustain overdraft fee if the account remains negative on four (4) consecutive business days. We are looking at $65 off the window (given to your bank). Now, imagine if you have more than three (3) overdrawn transactions. You may be looking at $135 (3 overdrafts + sustain overdraft fee of $30). If you get paid every two weeks or bi-weekly salary that may cost you either double or triple. This puts a strain on your finances or possibly may lead to unwanted financial stress. A key solution that can help you to avoid this financial mess is in item #1 (itemizing your monthly budget).
To those on a macro scale making "enough" (this is subjective) money, you may need a financial advisor to manage your portfolio. Financial advisor's fee may range from 0.5% to 1% of your portfolio annually. A good financial advisor can help you earn a strong return of about 3.5% to 4% on your investments. The question of the day is, is it worth it to have a financial advisor? The answer to this vital question is strongly dependent on two main things:
1. Your financial weight: This comprises of your overall portfolio. Where are you in your financial journey? Are you starting out , somewhere in the middle or do you have multiple investments in your overall portfolio that needs financial wealth management.
2. Reputation of the financial firm: Financial firms that have chalked tremendous traceable financial history offer a higher sense of financial security and sophistication. Confidence in one's financial institution of choice is paramount to one's decision.
Conclusively, the financial world is an inescapable world. We all buy and sell through the usage of money. Therefore, we all need to learn and educate ourselves about our spending, investments and savings habits.
By: Samuel Anderson
Comment below to share with us some of the steps you are going to take or have taken to make your financial life better.