Should you manage your own finances?

by Shelton on August 8th, 2014

filed under Finances

To manage your finances yourself or not to manage your finances yourself – that is the question.

On the one hand, somebody who is trained and works full-time at personal money management should be more likely to do a good job. On the other hand, nobody will take as much interest in – and particularly important, stands to be affected more by the results – than you. Ive made more than my share of mistakes, many of which would have been avoided with professional consultation, says Mitch Anthony, author of The New Retirementality.

Of course, there have been instances when my instincts were right, and I allowed a professional to talk me out of a decision.

Even if you have the expertise and can devote all the time required to manage your own finances, it can still pay to get an informed and unbiased second opinion – to confirm you are indeed on track or to alert you to different strategies.

But relatively few people manage their own finances on a full-time basis. The rest should indeed work with one or more advisors, depending on the size and complexity of the assets involved.

That said, you still need to learn enough about the relevant investment and tax aspects so at least you know what questions to ask. And every time a major life or financial event occurs (job change or loss, relationship change, health issue, family birth or death, retirement, windfall, loss) you definitely need to seek professional – and once again, unbiased – advice.

Advisors range from specialists at your financial institution(s) to general financial planners to experts in specific fields like the stock or real estate markets, accounting, law and so on.

The key: find a knowledgeable person who puts your interest above his or her sales commission or other income, and with whom you feel comfortable.

Look for professional qualifications, ask for references, and also ask how the individual manages her or his finances . . . and what the results have been.

Mike Grenby is a columnist and independent personal financial advisor; hell answer questions in this column as space allows but cannot reply personally. Email mike@grenby.com.