When you decide to hire a financial advisor, the first thing to be examined is your cash flow. How much money is coming in? Where is it going? Answers to these questions are a critical starting point. Your advisor needs to know what money is available to help you achieve your financial goals.
So, what can you do to track and understand your spending before hiring a financial advisor? One of these tools might work for you: Online Banking programs from your local bank, data aggregation websites like mint.com and professional software programs like Quicken.
The online banking programs available through your local bank have started incorporating tools to help you budget. The system will categorize your transactions and allow you to set spending goals. You can track the categories over time to see if you are on budget or over-budget. One thing to note: Make sure to double check how your transactions are categorized. Sometimes the system will misinterpret the name of the vendor. For example, many programs categorize, “Speedway,” as entertainment when really it is a gas station.
Some clients like the ability to see all their accounts from different financial institutions in one place. Websites like Mint, Personal Capital or You Need A Budget can accomplish this. Simply link all your accounts by providing your usernames and passwords. The system will periodically log in and update your balances. All you need to do is log into one website to see them all. With all of that information in one place, you can more easily use budgeting tools to track your spending.
Finally, for the ultra-serious budgeters, Quicken can be a great tool. You can download the transactions from your bank account into the software. Then you can categorize, budget and track expenses.
All these tools can help you stay in tune with your spending habits. They can even help you identify areas that need to be cut back. They do, however, require time and dedication. The tool is only beneficial if you use it regularly. If you are someone who needs to be motivated to stay on track, hiring a financial advisor might make sense. Your financial advisor can analyze your spending and coach you toward staying on budget and achieving your financial goals.
