9 Enormous Pet Peeves of Financial Advisors

Pet Peeves of Financial Advisors
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Everyone has a pet peeve. Whether yours is people who drive without using indicators or mouth breathers, you probably have that certain something that makes your skin crawl.

Financial advisors help people manage their money for a living. So, it makes sense that their pet peeves center around money and the mistakes people make with it. 

Today, their annoyances are your gain. Check out these pet peeves to learn what not to do with your finances. 

1. Not Rate Shopping with Several Lenders

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Most people need a personal loan in their lifetime — whether to buy a home or cover an unexpected expense. It doesn’t matter the reason behind your personal loan, you need to rate shop to see what is available

Assuming your home bank will give you the best deal is a pet peeve of Suze Orman. This best-selling author recommends you look beyond your preferred financial institution. You should compare rates and terms from a broad selection of banks, online direct lenders, and credit unions — and apply with at least three you feel good about. 

The cost of borrowing is your priority during this research. After all, you don’t want to overpay for a personal loan or line of credit. 

You should also look for other key features that indicate you’re working with a responsible lender. One is an accessibility widget that tears down barriers when viewing their website. This indicates the financial institution wants you to understand your terms and won’t hide behind legalese.

2. Ignoring Your Cybersecurity in a Digital Landscape

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An online loan isn’t the only way you manage your finances over the web. Like most people today, you hop on the Internet to check your bank balance, transfer funds, invest money, and open savings accounts. 

All these financial tasks require you to share personal information you need to guard closely. Another common pet peeve is sharing this data without a second thought, providing account numbers and contact details to any platform that asks. 

Only legitimate online loan companies, banks, and financial platforms should have access to this data. So it’s important you do your research. You want to make sure a financial institution has the following:

  • A good online reputation.
  • A visible privacy and security policy on their website.
  • Enterprise security to protect their server from unauthorized actors.

Cybersecurity is a two-way street. While a financial institution must protect your data, you should also safeguard your information with strong passwords. 

3. Diversifying Investments

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Diversifying investments is a fundamental strategy for managing risk and maximizing returns. When you diversify, you spread your investments across various asset classes, such as stocks, bonds, and real estate.

This approach helps reduce the impact of market volatility on your portfolio. Remember that diversification should align with your risk tolerance and financial goals. Consult with a financial advisor to create a diversified investment portfolio tailored to your specific needs and circumstances. 

4. Emergency Fund Size

Determining the appropriate size for your emergency fund is crucial. Financial experts often recommend saving three to six months’ worth of living expenses. This buffer can cover unforeseen emergencies like medical bills, car repairs, or unexpected job loss without derailing your financial stability.

Consider your personal circumstances, such as monthly expenses and job security, when setting your emergency fund goal. Remember, the peace of mind that comes from having a well-funded emergency fund is invaluable.

5. Retirement Planning

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Retirement planning is a long-term financial journey that requires careful consideration. Start early to take advantage of compound interest and the power of time. Contributing regularly to retirement accounts like 401(k)s and IRAs is essential.

Assess your retirement goals, estimate your retirement expenses, and create a savings plan that aligns with your objectives. Don’t forget to factor in potential healthcare costs and inflation. Periodically review your retirement plan to ensure it stays on track and makes adjustments as needed.

6. Budgeting

Budgeting is the foundation of sound financial management. Creating a budget helps you track income, expenses, and savings goals. Start by listing all sources of income and categorizing your expenses, including fixed costs like rent or mortgage payments and variable expenses like groceries and entertainment.

Identify areas where you can cut back or save more. Stay disciplined in adhering to your budget, and consider using budgeting apps or tools to make the process easier. Regularly review your budget to stay on top of your financial health.

7. Tax Planning

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Effective tax planning can help you optimize your finances and reduce your tax liability. Take advantage of tax-advantaged accounts, such as 401(k)s, IRAs, and Health Savings Accounts (HSAs). Consider strategies like tax-loss harvesting and maximizing deductions and credits.

Understand the tax implications of your investments and income sources. Consult a tax professional or financial advisor for personalized tax planning advice tailored to your financial situation. With proper tax planning, you can keep more of your hard-earned money and achieve your financial goals faster.

8. Reviewing Financial Goals

Financial goals are not static; they evolve over time. Regularly reviewing your financial goals ensures they stay relevant and achievable. Life circumstances, priorities, and income can change, necessitating adjustments to your goals.

Take time to assess your short-term and long-term objectives, such as saving for a home, funding education, or retiring comfortably. Reevaluate your progress, update your strategies, and set new milestones when necessary. This ongoing process of reviewing and adapting your financial goals helps you stay on track and maintain financial success throughout your life.

9. Living without an Emergency Fund

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Another common pet peeve shared by most financial advisors revolves around emergency funds. Not setting aside some savings for the unexpected is a big mistake. 

Living without an emergency fund leaves you vulnerable to household repairs or medical expenses that don’t fit neatly into your budget. You can wind up borrowing more to cover these financial blips if you can’t delay them. 

Granted, building an emergency fund is no easy task. Most Americans would need two years to set aside one month of savings. If you struggle to fit savings into your budget, reach out to a financial advisor or credit counsellor for help. These professionals can provide proven money management strategies that can accelerate your savings. 

Getting in touch with a professional can help you flag other financial mistakes you might be making. But these three pet peeves provide a good starting point. Budget for an emergency fund, beef up your cybersecurity, and always rate shop.