- We all love DIY, but there are times when seeking professional financial help is wise.
- If you want to retire or send your child to college, a CFP can help you achieve these goals.
- If you’ve come on a lucky break, talk to a professional early to understand your tax situation.
We are a do-it-yourself culture that places great value on doing everything from home renovations to daily self-trading. But not everyone is a financial wizard, and it’s okay to consult an expert when you’re puzzled.
Michael Garry, a financial planner, self-described “recovering attorney” and founder and CEO of Yardley Wealth Management, has outlined seven situations in which you should speak to a financial planner.
1. Predict an important life event, such as a new child or job loss
To truly enjoy a happy life event like a birth or wedding, or to reduce the stress of losing your job, ask a financial planner for help.
Garry notes that a financial planner can help you plan “big, expensive, life-changing events that people aren’t sure if they can afford them or not.” And figuring out money up front can save you a lot of stress later on.
2. Get a boon: inheritance, IPO, win the lottery!
Lottery winners are more likely to go bankrupt and 70% spend all winnings within five years. Without proper money management, one-time financial payments such as obtaining an inheritance, acquiring an employer, winning the lottery or an IPO can make your life worse rather than better. Even rich people can go broke without good financial advice.
Garry suggests speaking to a financial planner before doing anything with a windfall, especially if the money is new to you. “Many choices of what you do will determine the taxes you pay,” he says. And the amount you owe in taxes will determine how much you have left after taxes.
Plus, tips can help put money into perspective. “Sometimes it would take a stranger like a financial advisor or even a CPA,” says Garry, to help you figure out if a big chunk of money is really enough to change your life.
3. You have had a sudden change in your financial situation that you don’t understand
Here’s the situation: Suddenly, you can’t pay your credit card bills at the end of the month, even though it’s never been a problem before. Or, on the other hand, your bank account balance is increasing even if you’re not doing anything different. Either way, it’s worth finding out what’s going on.
“It might be a lot easier for a financial planner to find the root than for many clients,” says Garry.
Common causes of financial mysteries are a change in withholding tax or the amount taken from the paycheck for benefits. Garry notes that tracking these elements isn’t for everyone, but it’s easy for a seasoned financial professional to uncover the cause of the change and help come up with a plan to bring you back to economic equilibrium.
4. You are doing well with the money, but you can’t explain why
Garry notes that many people do everything right with their finances: constantly working, saving, investing, and taking advantage of business correspondence programs. But this does not guarantee your future financial health.
“We have mainly had bull markets since the 1980s,” he says. “People could be in great shape just by going to work all the time.” Your money continued to grow until you saved yourself during a recession.
“But it might not always be that easy in the future,” Garry says. In uncertain markets, solid financial advice can help you protect your investments.
This is especially true if you are approaching retirement. “If you are within a few years of retirement or retirement age”, – age 55 or older – “and you’ve never sat down with someone to discuss your finances, I think it would be really enlightening.” You may find that you need to increase your retirement contributions or work a few more years to finance a comfortable retirement life.
Use Insider’s calculator to see if you’re on your way to a comfortable retirement by answering a few questions about yourself, your savings, and how long you plan to keep working.
* The need is based on coverage of 70% of your annual pre-retirement income and a life expectancy of 100 years.
5. You want to retire someday
Yes, this affects almost everyone. As noted above, stumbling into retirement without a clear picture of one’s financial needs and resources is risky.
You don’t want to find out when you’re 58 that you’ve done the wrong thing and aren’t prepared for retirement, so the best time to do a retirement plan is long before you retire.
For example, Garry points out that paying a child’s college tuition can reduce your retirement savings. That might be fine, as long as you have a plan to fill the hole.
If you don’t understand that you are short of retirement savings until after you leave the workforce, note that it can be difficult to get back to work. After a few years with no work experience, finding a job that pays something close to what you earned before may be difficult or impossible. That’s why it’s essential to understand your retirement income before you quit working.
6. You are sending a child to college
Garry has firsthand knowledge of the pain of student loans. Law school left him $ 90,000 in debt and his first child was born two weeks after graduation. He had to work nights as a bar during his early years as a lawyer to make ends meet.
She doesn’t want the same for her children, so she had a frank conversation with her youngest daughter about tuition at her first-rate school compared to the income she could expect from her chosen career.
He realized how much he could contribute to his education, how many debts he would have to take on, and the monthly loan payments after graduation. The heavy load of debt would have taken a large bicycle off his paycheck and could have kept it living at home. Armed with this information, she chose an excellent state college, loved her school, and managed to graduate debt-free.
Garry thinks parents have a responsibility to clear up student debt finances because “these are numbers without context” for an 18-year-old.
College decision time is a critical time to sit down with a financial planner and understand the ramifications of different school choices. It is a decision that can have a substantial financial impact on both parents and the student long after graduation.
7. You are worried or stressed about your finances
Garry thinks financial stress is the main reason for getting professional help. “[If] you can’t sleep or are very nervous, and it’s always on your mind, so you should talk to a financial planner, “he says.
In most cases, he finds that people know what the problem is, but they don’t know how to fix it. It could be monthly payments that you can’t afford or if the employer takeover is enough to bring you into retirement.
For people whose stress comes from debt crushing, the rate for a financial planner may be unaffordable. That doesn’t mean you can’t get help; many free or low-cost credit counseling services offer services to help people understand their finances and find solutions to money problems.