5 Key Ways Being a Financial Planner Has Saved Me Money — and How You Can Too
Financial planners are experts at managing money and creating wealth. While their advice is invaluable, you don’t necessarily need to hire one to start implementing some of the key strategies they use to save money for themselves. By adopting some of these financial habits, you can boost your savings and put yourself on the path to achieving your goals.
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Marcel Miu, the founder and lead wealth planner at Simplify Wealth Planning, has years of experience in financial planning. He’s applied the principles of financial management not only to benefit his clients, but also to make significant improvements in his own life.
Build a Budget and Live Below Your Means
One of the core tenets financial planners live by is creating a realistic budget and sticking to it religiously. It’s about being intentional with every dollar rather than making impulsive purchases. They adhere to the age-old advice of ensuring your expenses don’t exceed your income.
As a financial planner, Miu has seen firsthand how lifestyle inflation and spending beyond one’s earnings can lead to crippling debt, constant financial worry, and an inability to build wealth over time. He is determined not to fall into those same traps himself. Miu tracks his family’s earning and spending each month using budgeting software. This gives him a clear picture of his household.
“This principle has reduced my financial stress, allowing for a more enjoyable life,” Miu said. “Identify areas where you can cut back without significantly impacting your quality of life. It’s about making more mindful spending decisions”
Take an objective look at your expenses and make mindful decisions about your spending. By living below your means, it becomes easier to save money, pay down debt and achieve your goals. It also reduces anxiety around money, allowing you to spend energy on more fulfilling pursuits.
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Embrace a Long-Term Perspective
Marcel Miu’s deep understanding of the immense power of compound interest has had a profound impact on his personal financial strategy. As a financial planner, he recognizes the exponential growth potential that comes from investing money early and consistently over long periods of time.
“Understanding the power of compound interest has encouraged me to invest early and often, leading to significant savings and growth over time,” Miu said.
By putting this investment strategy into practice himself, Miu has been able to accumulate significant savings and watched his investment accounts experience exponential growth over the years.
“Start investing as soon as you can, even if it’s a small amount,” Miu said. “The key is consistency and a focus on the long term.”
Have an Emergency Fund
As an experienced financial planner, Miu understands the critical importance of having an emergency fund. This financial cushion has been a lifeline for him on multiple occasions when unexpected events threatened to derail his finances.
“Having an emergency fund has saved me from financial distress during unexpected events,” Miu said.
Miu has personally experienced situations like major home repairs, medical bills, temporary job disruptions and other unanticipated expenses that could have caused significant financial distress. However, because he had saved an emergency fund, Miu was able to cover these costly surprises without going into debt or being forced to deplete his retirement savings.
“Aim to save at least three to six months’ worth of living expenses in an easily accessible account,” Miu said.
Make it a priority to maintain an emergency fund holding at least six months’ worth of your household’s living expenses. Keep this money stashed in a high-yield savings account. This way it will remain safe but still earn a bit of interest and also be accessible for any emergencies.
Educate Yourself About Money
Miu understands the importance of continuously expanding his own financial education to make well-informed money decisions. He doesn’t just rely on the knowledge he had coming out of his certification programs years ago.
“Staying informed about financial trends and products has helped me make informed decisions that align with my financial goals,” Miu said. “Dedicate time to educate yourself on financial matters. This could be through reading books, following reputable financial news sources, or even taking online courses.”
He stays up-to-date on the latest financial trends and strategies that could impact him. He subscribes to several reputable financial publications and newsletters to stay on top of developments in areas like investing, tax laws and more. He even attends periodic industry conferences.
Miu thinks everyone should adopt a similar self-guided education around financial matters. Read personal finance books, follow finance news sources and always be hungry to learn so you have the knowledge and skills to make smart money moves.
Invest In What You Know
Miu applies one of the fundamental principles of investing that he preaches to clients — only put your money into markets and products you have a comprehensive understanding of. This approach has allowed him to minimize investment risks while optimizing his returns.
“Investing in markets or products I’m knowledgeable about has minimized my risks and optimized my returns,” Miu said. “Before investing, do your homework. Understand the risks and potential returns. If you’re not confident, seek advice from a financial advisor.”
Miu is very selective about which specific opportunities he chooses to invest in. He spends time analyzing prospectuses and financial statements for any potential investment, and he only proceeds if he has a firm grasp on the risks and the projected returns after this vetting process.
Adopt this same approach before putting your hard-earned money on the line. Understand the merits and risks of any opportunity. If you don’t have the expertise or confidence to evaluate an investment prospect yourself, hire a financial advisor for professional guidance.
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This article originally appeared on GOBankingRates.com: 5 Key Ways Being a Financial Planner Has Saved Me Money — and How You Can Too
