Are you undecided about hiring a professional to help you manage your finances?
In a country where roughly 80 percent of adults don’t use financial advisors, it’s understandable if you’re questioning why you want to do something most people don’t. After all, there’s some comfort and safety in numbers.
Here’s the thing, though. Some numbers can shape your life, especially when it’s about your finances. One of the most significant benefits of hiring a financial advisor is that they can help you get your financial number in order.
Keep reading this article, and you’ll understand precisely how getting professional financial advice is worth it.
Debt Management
Most people in the U.S. get into debt soon after they attain the age of legal majority (typically 18).
From student loans and credit cards to personal and auto loans, there isn’t a shortage of credit facilities that will get you hooked on debt. Add a mortgage later in life, and you may end up staying in debt for a long time. That’s why the average American has about $50,000 in debt.
Not all debt is bad, though. In fact, debt helps you build your credit history and can come in handy during financial emergencies. But, without proper debt management, it’s easy to fall into a vicious debt cycle that will destroy your financial health.
Financial advisors will help you make sound debt management decisions. They’ll advise you on the type of loans to avoid, and if you’re already in debt, design a repayment strategy that works for your finances.
Retirement Planning
50 percent of men and 47 percent of women in the U.S. don’t have any retirement savings, according to recent Census Bureau data. Yet, retirement is coming soon. Will it find you financially prepared?
During retirement, you won’t be earning an active income. So, you’ll depend on passive sources of income to fund and sustain your lifestyle. What’s more, financial needs tend to increase in retirement, primarily because health declines with age.
If you don’t have any retirement plans, the best time to start is now. You don’t have much time on your side, which is why you need to consult a financial advisor.
These professionals are retirement planning experts. They’ll estimate the money you’ll need in your retirement and advise on the various retirement planning tools you should utilize.
For example, if you’re self-employed, you probably already know you need an individual retirement account (IRA). But did you know several types of IRAs are available, each with pros and cons? Bank on your advisor to recommend the best IRA for you.
Emergency Preparedness
Preparing for your financial future is bright, but that doesn’t mean you ignore the present. Your financial wellness today is just as important as your financial wellness in retirement.
How prepared are you for a financial emergency, for instance? If your car breaks down today, can you meet the repair bill without waiting for a paycheck or using your credit cards?
It’s a no-brainer that everyone needs to have a rainy day fund. But why do financial emergencies still catch so many people out?
It’s because saving money is easier said than done. Left to your own devices, even executing a simple decision such as transferring $100 from your monthly paycheck to a savings account will be a big task.
You need a financial advisor to help install the habit of saving and other food financial habits in you. When someone holds you accountable, you’ll be in a better position to do what needs to be done.
Tax Avoidance
Tax avoidance sounds like a crime, but it isn’t. Every taxpayer is free to find ways to reduce their tax liability legally.
Depending on your financial situation, there could be a couple of ways to pay less tax without raising Uncle Sam’s eyebrows. For example, you’re entitled to a raft of tax deductions if you’re a homeowner.
Unfortunately, the average American isn’t making the most of tax deductions. It’s not because they don’t want to. They simply don’t have any idea about the deductions.
Financial advisors will put that kind of financial negligence and self-sabotage to a quick stop. A simple assessment of your assets and liabilities is enough to tell them whether you’re paying more than your fair share of taxes. Don’t be surprised if you go from writing checks to the IRS to getting checks from the IRS (tax refunds).
Although some tax matters are complex and require you to hire a certified tax professional, a financial advisor suffices for simple issues such as identifying tax deductions. Even a virtual advisor like virtualadviser.net can help you with that.
Estate Planning
Estate planning is typically left to estate lawyers, but your financial advisor has a significant role. You just need to let them play it.
You see, estate lawyers are mainly concerned with the distribution of estate after your death. Financial advisors want to help you safeguard the economic well-being of the loved ones you’ll leave behind.
If you’re the breadwinner in your family, for example, the lives of your loved ones could be disrupted in the event of your sudden demise. If you live in a mortgaged house, will your survivors keep up with the payments? Throw in school fees, utilities, and other living expenses; you can see how fast life will go south for them.
Your financial advisor is your friend when you need to have that uncomfortable “death talk.” They’ll raise your awareness of estate planning tools like life insurance to help you prepare for the unexpected.
Enjoy the Benefits of Hiring a Financial Advisor
If we’re being honest, most of us only have one goal in life: to achieve financial freedom. Sadly, it’s an elusive goal, and only a few people can reach it in their lifetime.
With a financial advisor on your team, you’ll increase your chances of achieving your financial goals. There are also other important benefits of hiring a financial advisor, including estate planning.
Be sure to find more bits of personal finance advice in the finance section of our blog!
