A Financial Advisor Can Help You Achieve Your Financial Resolutions


A new year brings new opportunities for self-improvement. You might have a New Year’s resolution to exercise more or quit smoking, but setting goals for your financial health is important, too.

Yet New Year’s resolutions are notoriously difficult to keep, in part because it’s easy to lose motivation and focus over time.

A financial advisor can help you stick to your resolutions by setting realistic goals and charting a path for the years ahead.

If your New Year’s resolution is improving your finances, guidance from a financial professional can help you check it off your list.

Key takeaways

  • Financial advisors can help you set savings goals, create budgets, build emergency funds, tackle debt and plan for retirement.
  • Experiencing a major life change, like having a baby or getting divorced, is often a good time to review your financial goals.
  • If you hire a financial advisor, be sure to work with a fee-only fiduciary.

What is a financial advisor?

A financial advisor is a professional who provides expert guidance on managing and investing your money.

There are several different types of financial advisors, including certified financial planners (CFPs), wealth managers and robo-advisors.

Each type of financial expert specializes in certain services. For example, CFPs focus on comprehensive financial planning, while wealth managers concentrate on managing investments for high net worth clients.

Robo-advisors, on the other hand, leverage technology to offer automated investment solutions tailored to your risk tolerance and financial goals.

Some advisors charge an annual fee based on your total assets, while others charge a flat hourly rate for financial advice.

You’ll want to make sure the advisor you hire is a fiduciary, which means they’re ethically obligated to put your interests before their own or their firm’s. This means their advice is truly unbiased, and they won’t steer you toward products that don’t fit your needs.

If you’re looking to find a financial planner, Bankrate’s financial advisor matching tool can connect you to qualified professionals in minutes.

Financial advisors and your resolutions

Financial advisors are versatile partners in achieving your New Year’s resolutions. Whether you aim to save for a dream vacation, buy your first home or secure a comfortable retirement, their financial tips and services can be tailored to your unique goals.

Setting financial goals

One of the most significant ways a financial advisor can assist you is by helping you define short-term and long-term financial goals.

Short-term goals might include paying off debt or saving up for a wedding, while things like retirement or home ownership often require more long-term planning.

Consider the scenario of saving for a dream home. Your financial advisor will crunch the numbers, factoring in your current income, savings capacity and real estate market trends. They’ll chart a path with achievable milestones to help keep you on course for the house you’ve always wanted.

Creating a budget

A common New Year’s resolution is creating a budget. A personal financial advisor excels in this area, and can help guide you through the process.

If your income or expenses changed dramatically this year, re-evaluating your budget with an expert can be a game changer heading into 2024.

They’ll conduct an in-depth analysis of your spending habits, identifying areas where tweaks can be made. For example, they might recommend cutting back on dining out or subscription services, and instead allocating those funds to savings or debt repayment.

Building up emergency savings

Alarmingly, only 48 percent of U.S. adults have enough money in savings to cover three months of expenses, according to Bankrate’s 2023 annual emergency savings report. And nearly one in four U.S. adults say they have no emergency savings at all.

A financial advisor can direct your focus toward building a robust emergency fund. They’ll likely advocate for a multi-pronged approach that includes automating contributions to a dedicated savings account while scouting high-yield options that amplify your safety net.

They can also be your go-to source for financial education. They’ll equip you with tools and resources to learn more about building strong savings habits.

Tackling debt

For many Americans, reducing or eliminating debt is their biggest resolution going into the new year. In fact, 26 percent of Americans feel their debt is impeding their path to financial security, according to a recent Bankrate financial freedom survey.

A financial advisor can help you get your debt under control by mapping out a clear repayment plan. For example, if you’re contending with multiple high-interest debts, they might recommend a balance transfer to a credit card with a 0% introductory APR.

A financial advisor can also assist you with navigating the often complex world of debt consolidation, helping you compare options so you receive the best possible terms.

47 percent of credit cardholders currently carry debt month-to-month, up slightly from 46 percent in December 2022 and 39 percent in December 2021.

Source: Bankrate credit card debt survey

Planning for retirement

Retirement may seem like a distant dream, but the truth is, time flies.

A staggering 56 percent of Americans feel like they’re behind in saving for retirement, according to a September Bankrate retirement savings survey.

Working with a financial advisor can be a game changer when it comes to retirement planning.

They can help you set clear retirement savings goals by considering factors like your desired lifestyle, anticipated Social Security income and target retirement age.

An advisor can also recommend tax-advantaged retirement accounts, like 401(k)s and IRAs, and devise a diversified investment portfolio aligned with your risk tolerance.

Do I need a financial advisor?

Not everyone needs a financial advisor, but many people can benefit from the personalized guidance they offer. Speaking with an advisor can be especially helpful if you’re feeling stuck with your finances or are facing a turning point in your life.

For example, if you’ve recently tied the knot, a financial advisor can assist in helping you merge finances with your partner and establish a joint financial plan. They can answer questions about filing taxes as a married couple and help you shop around for life insurance policies.

Or maybe you want to start your own business? A financial advisor can be the difference between your new venture thriving or merely surviving. They can guide you through the process of creating a business plan, explore tax strategies and map out a budget to set your company up for financial success.

Bottom line

It’s the season of resolutions, and while gym memberships and diet plans take center stage, don’t overlook the importance of setting financial goals for the new year.

Working with a financial advisor can make the process easier. They’ll hone in on the areas of your financial life you want to improve, whether that’s saving up money for a down payment or picking the right investments for your retirement account.

If your New Year’s resolution is to master your finances, consider the guidance of a financial planner. With their expertise, 2024 can finally be the year you cross off your financial goals, one by one.


Source link