12 things you can do to avoid having to hire a Financial Advisor in Your Life

Jul 1

Here are 12 things you can do to avoid having to hire a Financial Advisor in Your Life.

1. Monitor and properly manage your cash flow and make sure your cash flow is net zero every month. Every dollar should have a job (Expenses & Savings).

2. Have an effective debt pay off strategy. Whether it’s paying off outstanding credit card balance or your car loan or your mortgage or your student loans.

3. Know your money’s worth when it comes to paying off debt. Understand the debt that you want to aggressively pay off makes sense? Or is it better to use your dollars more efficiently? For example, if you have a 0% car loan and you run a business in which you are using your vehicle for the business. Does it make sense to pay off the loan aggressively? What’s the opportunity cost? Does it better the financial health of the business? Does it make your taxes more efficient?

4. Be better at tax planning. Know your current tax structure and make sure you are putting away money in a manner that’s tax efficient for you, not what everyone else is doing. For example, a couple (without kids) earning over $350,000 per year living in California or New York may have a better advantage using the Pre-Tax Employee Deferral (401k / 403b) vs. the Couple with dependents vs. the couple without no dependents

5. Understand your risks and Insurance Policies. Know what’s the appropriate coverage you need on all your insurance policies. For example –

a. Health Insurance Coverage – Does it make sense to go with the HMO plan or the PPO plan? Strategize how to use an HSA account. Will it be for long-term or short-term health needs? Cross check the plans with their annual deductibles, copays, out of pocket expenses, and the network coverage.

b. Disability Coverage – Am I paying for this coverage or is my employer? Or both of us? Do I have short-term and long-term disability coverage? What’s the deductible? What’s the benefit amount? Do I pay taxes on the disability income once I receive it? Is the coverage enough or do I need more? If so, how much more coverage do I need?

c. Car & Homeowners Insurance Coverage – Do I have enough liability coverage to protect myself? Do I need to reevaluate my deductible? Am I overpaying for insurance based on my current coverage? Am I properly insured or is there any risks that I am exposed of.

d. Life Insurance Coverage – Do I have enough assets & income to help my family in case I am gone? Do I have enough life insurance coverage to make up the difference? Have I calculated how big of a liquidity event my family will need to make sure everyone I love is taken care of? Am I overinsured and not need all this life insurance coverage? Will my family struggle with money or our family business financially in case I pass on unexpectedly?

6. Educate yourself on Investments. Think long-term for long-term savings. Meaning, if you know this money isn’t going to be touched for the next 10, 15, 20 years; then invest it for the long-term. But if you have a goal that’s 2 years away or 4 years away, you want to consider taking the risk down. Timing the market rarely ever works and for those who it DOES work, it’s luck. Unless you make it a full profession and become an active trader and that’s a full-time job on its own. Don’t try to beat the market, just participate in it and take risks as it suits fit to your needs.

7. Know your tax efficiencies with Investments. How can I make my current investment location strategies more tax efficient? What are some ways to create tax efficient opportunities when the market goes volatile? What additional tax efficiencies can we have if we have kids? What if we pay state income tax?

8. Do your homework before you make any major financial decisions. Did the other mortgage lenders give us a better quote? Did we do our best on negotiating the fees & points with these lenders to lower our costs? Should we buy a $700,000 home or a $800,000 or a $650,000 based on our cash flow? Did we calculate how much our cash flow will be impacted after this new financial decision? Did we make this financial decision in the most tax friendly way possible? Did we overlook something?

9. Review employer benefits program annually. Did I make sure I’m taking advantages of the benefits being offered to us? Did I overlook any available benefits that can make my and my family’s life better? Have I identified and executed on any additional tax advantaged benefits offered through my employer?

10. Review your Estate Planning. Do we have beneficiaries listed on our accounts & insurance policies? Do we have an updated will, living will, advanced medical directive or any updated legal documents? For those with kids, do we have our wishes listed in case if something happens to us, how will our children be taken care of until they are old enough to take care of themselves? Are we going to end up paying 40% in Estate Tax on our wealth? Did we apply the right estate planning tools that fits our needs?

11. Monitor your financial health frequently by shopping for better quotes on car insurance, phone bill, internet bill, homeowners insurance. Basically any bill that can be negotiated that can lower your annual expenses. Increases savings by percentages ongoingly. Rebalance investments as you reach closer to your goals or if your goals change and during volatile time periods for tax efficiency. Plan your taxes annually to make sure you don’t have any unexpected tax bill. Plan your major expenses on an on-going basis and set target savings goals.

12. Make it fun and don’t half ass it!

I am Raman Singh, a Certified Financial Planner™, Your Personalized CFO at Singh PWM. My vision is to empower my community by providing guidance, coaching, and courage to help them achieve happier and healthier lives. I am happy to schedule a non-obligation consultation with you to answer your questions and guide you down the right path of your financial journey. So let’s chat!