Guest Post Money Management

Read This Before You Hire a Financial Advisor

Tim Chen is founder and CEO of, a website that helps consumers to compare credit card rewards.  Tim also educates consumers about credit cards and debt management at the Forbes Moneybuilder Blog, the Huffington Post, and the Christian Science Monitor.


Tempted to Seek Out Personal Finance Advice?  Look in the Mirror First

While managing your finances is certainly not an easy task, personal finance at its most basic level is simply making sure that you are earning more than you are spending, and that your savings will be able to carry you through life after you’ve stopped working full-time.

Even though it sounds simple enough, there are a lot of moving pieces to balance in a financial package, including investments, insurance, credit cards, mortgages and more. And with the global economic downturn humbling many of us, more and more people are turning to outside advisors for personal finance help.

But even hiring outside help can be confusing if you don’t fully understand what you’re getting yourself into, and it’s certainly not cheap. So before you pay someone else, your time and effort is probably best spent uncovering the answers to some basic questions and gaining a deeper understanding of your inclinations, your financial habits, and what you can do to control them.

You’ve got questions?  You’ve got answers.

Answers to such questions may be difficult to face, but should not be difficult to find. Taking greater control of your personal finances means first and foremost analyzing your income and your personal daily expenditures.  All those bank statements may seem foreboding, but they are great tools for analyzing your personal cash flow and figuring out how to maximize it.

You might even want to try a finance website, such as (free) or Quicken (fairly cheap) to get a clear picture of your finances without wading through all that paperwork. Transactions like charges to your card are recorded automatically and easy to see.  And they display easy-to-read graphs and charts, showing you exactly how much you’ve spent on shopping or dining out in the last few months.  Without such hard data, most of us will tend to underestimate how much we’re spending frivolously. These apps will also allow you to sign up to pay bills online and spread your payments around, giving you more control over what comes in and what goes out.

Credit cards are another good way to keep track of your spending.  Most credit card companies issue very detailed statements, breaking your spending down into categories and issuing quarterly or annual summaries of where your money went.  American Express in particular has a number of such online tools that are meant specifically to give you better insight into your habits, and therefore better control over them.

Plus, knowing where you use your credit cards the most also has the advantage of helping you to maximize the money you can get back in rewards. For example, if you find that you spend more money on restaurants than you originally thought, you would do well to get a Costco Amex card or a Citi Forward card as your main credit card, and use it to earn money back on that spending.  Alternatively, if your main expense is gas for your car, you would be better off with a gas credit card like the PenFed Platinum Cashback and earn 5% rebates.

Knowing yourself pays off.  Learning about yourself in this way will give you a clearer sense of what steps to take to eliminate unnecessary personal spending, and to make sure you’re getting the best discounts or rebates on the necessary spending.

One last option before you go the financial advisor route

Even after you’ve gotten a handle on how and where you tend to spend money, it’s not always easy to make the necessary changes.  Part of understanding your own inclinations is knowing your weaknesses and getting help when you need it.

There are plenty of books out there that are intended to help you overcome your own psychology, like Ramit Sethi’s I Will Teach You To Be Rich.  But you may even be better off with a “pseudo-advisor” like Suze Orman or Dave Ramsey.  Gurus like this have well-respected and proven plans for eliminating debt, controlling spending, and getting started saving.  Plus they each have a large community of people like you that you can talk to, share war stories with, and who will encourage you along the way.  This is basically what a financial advisor would do, except you’re still in control and it’s not nearly as expensive in the long run.

If you’ve had a financial advisor, what was your experience like? If not, have you considered trying one?


Comments (3)

  • Read This Before You Hire a Financial Advisor…

    While managing your finances is certainly not an easy task, personal finance at its most basic level is simply making sure that you are earning more than you are spending, and that your savings will be able to carry you through life after you’ve stoppe…

  • Illuminating post. Thanks for advising on doing research on your personal finances before seeking any financial advice. Are there financial advisors that make the time to explain any confusing points with their clients?

  • I agree that really you can do most things yourself, at least on a basic level. Saving can be achieved by going through your normal behaviour and finding ways to cut bits out that you don’t really need.


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