A new year brings new opportunities for self-improvement. You may have a New Year’s resolution to exercise more or quit smoking, but setting goals for your financial health is also important.
Still, 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 resolutions will improve your finances, guidance from a financial professional can help you cross it off your list.
Key Takeaways
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Financial advisors can help you set savings goals, create budgets, build emergency funds, tackle debt and plan for retirement.
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Experiencing a major change in your life, such as having a baby or a divorce, is often a good time to reassess your financial goals.
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If you hire a financial advisor, make sure you work with a fee-only fiduciary.
What is a financial advisor?
A financial advisor is a professional who provides expert guidance in managing and investing your money.
There are 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 asset managers focus on managing investments for high-net-worth clients.
Robo-advisors, on the other hand, use technology to provide 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 fixed hourly rate for financial advice.
You need to be sure that the advisor you hire is a fiduciary, meaning he or she is ethically obligated to put your interests above their own or their company’s. This means that their advice is truly unbiased and they won’t steer you towards products that don’t meet your needs.
If you’re looking for a financial planner, Bankrate’s financial advisor matching tool can help you connect with qualified professionals in minutes.
Financial Advisors and Your Resolutions
Financial advisors are versatile partners in realizing your good intentions. Whether you want 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 important ways a financial advisor can help you is by helping you define short- and long-term financial goals.
Short-term goals might include paying off debt or saving 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 analyze the figures, taking into account your current income, savings capacity and real estate market trends. They’ll map out a path with achievable milestones to keep you on track to the home you’ve always wanted.
Making a budget
A common New Year’s resolution is to make a budget. A personal financial advisor excels in this area and can guide you through the process.
If your income or expenses have changed dramatically this year, reevaluating your budget with an expert could be a game changer heading into 2024.
They perform an in-depth analysis of your spending habits and identify areas where adjustments can be made. For example, they might recommend cutting back on dining out or subscription services and instead putting that money towards savings or debt repayment.
Build emergency savings
According to Bankrate’s 2023 Annual Emergency Savings Report, only 48 percent of American adults have enough savings to cover three months of expenses. And nearly one in four American adults say they have no emergency savings at all.
A financial advisor can focus your attention on building a robust emergency fund. They’ll likely advocate a multi-pronged approach, including automating contributions to a dedicated savings account, while exploring high-yield options that expand your safety net.
They can also be your favorite source for financial education. They provide you with tools and resources to help you learn more about building strong savings habits.
Tackling debt
For many Americans, reducing or eliminating debt is their biggest resolution heading into the new year. According to a recent financial freedom survey from Bankrate, 26 percent of Americans believe their debt is hindering their path to financial security.
A financial advisor can help you get your debts under control by mapping out a clear repayment plan. For example, if you are dealing with multiple high-interest debts, they may recommend transferring the balance to a credit card with a 0% introductory APR.
A financial advisor can also help you navigate the often complex world of debt consolidation, allowing you to compare options so you receive the best possible terms.
47 percent of credit card holders currently have monthly debt, up slightly from 46 percent in December 2023 and 39 percent in December 2023.
Source: Research into bank debt on credit cards
Plan for retirement
Retirement may seem like a distant dream, but the truth is: time flies.
According to a September Bankrate survey, a whopping 56 percent of Americans feel they are behind on saving for retirement.
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 such as your desired lifestyle, expected Social Security income, and target retirement age.
An advisor can also recommend tax-advantaged retirement accounts, such as 401(k)s and IRAs, and create a diversified investment portfolio tailored to your risk tolerance.
Do I need a financial advisor?
Not everyone needs a financial advisor, but many people can benefit from the personal guidance they provide. Talking to an advisor can be especially helpful if you’re stuck with your finances or are facing a turning point in your life.
For example, if you recently tied the knot, a financial advisor can help you merge finances with your partner and create a joint financial plan. They can answer questions about filing taxes as a married couple and help you shop for life insurance.
Or maybe you want to start your own business? A financial advisor can make the difference between your new business thriving or surviving. They can guide you through creating a business plan, exploring tax strategies and mapping out a budget to set your business up for financial success.
In short
‘Tis 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 will delve into the areas of your financial life that you want to improve, whether it’s saving money for a down payment or choosing 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 in which you can cross off your financial goals one by one.
