I swear by 4 strategies to manage my money, no financial planner required
- Financial planners are fantastic, but not everyone can afford to hire one.
- I certainly fall into that camp - I'm earning a decent living, but I can't afford to keep a CFP on retainer. Instead, I've learned a few strategies to grow my money on my own.
- I opened a SEP IRA because I'm self-employed, and I invest in the stock market with Robinhood. I also read about financial planning constantly, and actively evaluate my financial health and goals.
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While financial planners are necessary consultants for many people, especially those with significant wealth and diversified accounts, having your own financial planner is a luxury you can probably do without if you are new to building your finances or don't yet have a ton of assets.
It's no secret that financial planners are professionals who make a living off of managing money intelligently, and it's great to have one in your corner. They are especially helpful if you want to start investing wisely and need additional insight. But the cost of keeping a financial planner on retainer may not necessarily be worth it for you.
You may think you could never manage your finances by yourself, but with a few tips and tricks, you could be on top of your financial health in no time.
As a relatively young person without a ton of savings, hiring a financial planner doesn't yet make a lot of sense for me. Instead, I do a couple of simple things with the money I have, and by exploring multiple investment and savings opportunities, I have managed to build a nice portfolio that serves as my financial foundation moving forward.
Here are a few of my tips to help you start taking charge of your financial well-being.
Contribute to a SEP IRA
Since I am a small business owner, I don't have an automatic pension deduction from my quarterly taxes or access to a company-sponsored 401(k). Instead, I've set up a Self-Employed Person Individual Retirement Arrangement (SEP IRA) that allows me to save for retirement.
The money in my SEP IRA is invested in a Vanguard Total Stock Market Index Fund (VTSMIF), which, hopefully, means my money will make more money.
Instead of choosing to buy shares of specific publicly-traded companies, VTSMIF gives me shared access to the entire US stock market, which includes large and small company stocks. It's a low-cost way to enter the stock market game.
As the market fluctuates as a whole, my retirement fund follows. This is a simple way to start investing and save for retirement without having to invest a ton of time into research.
Invest with Robinhood
Even though saving for retirement is important, it's fun to have a play portfolio that is accessible if I need the cash. For me, my play portfolio is my investment account with Robinhood.
I got into Robinhood because I wanted to learn the ins and outs of the stock market and play around a little bit with day trading. Now, I have a Robinhood brokerage account that I can use to buy stocks and funds, options, gold, and even cryptocurrency.
This has taught me about the stability and volatility of the market, and I like that Robinhood aims to democratize the markets by ending trading commissions that folks on Wall Street never had to pay in the first place.
Read
It's the final fiscal quarter of 2019, and you can bet that financial literature is out there and available on the internet for free. Even though the material is available, though, many people are not as financially literate as they could be - either because they don't know where to look, or because financial health isn't their biggest priority.
As understandable as that may be, it is up to you to take control of your financial health in any way you can. You can start with a simple internet search; whenever I have a specific question or don't understand the jargon in economic writing, I make sure to look up those acronyms and terms.
To educate myself, I read books and blogs on personal finance, investing, and saving for the future. By reading this article, you're already on the right track!
Some of my favorite books for financial advice and philosophy include, "Rich Dad, Poor Dad," "The Millionaire Next Door," "The Intelligent Investor," and "A Random Walk Down Wall Street."
Reflect
Chances are your financial circumstances either change regularly or will change in the future. You may be building your family, going back to school, changing jobs, benefiting from an inheritance, or experiencing any number of relevant situations. In these cases, it's important to reevaluate your financial health and make any necessary changes.
For me, I consider my overall financial situation on a regular basis so that I can make sure that my choices still make sense.
As I monitor my investment profiles and watch my savings grow, it may eventually make sense to hire a financial planner so that I can make sure everything is managed as intelligently as possible.
I'm no expert, and there will likely be a certain threshold of wealth where it makes sense to delegate to a professional. For now, though, I stay financially healthy by monitoring my wealth and diversifying my accounts in order to maximize any potential growth.
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