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A certified professional can help create a lasting budget.

Realistic Financial Planning With Professional Help In The New Year

Start the new year with a new financial plan. According to a 2015 Pew study, over half of Americans reported spending more than they earn each month1 or simply breaking even with their monthly finances. Thirty-three percent admitted to living with no savings.

Fantasy versus reality

The type of mentality that leads to this financial insecurity is known as living in a money fantasy. According to Forbes, Americans live a lifestyle outside their means. A challenge most then face is understanding how to downgrade their lifestyle into something manageable that won’t leave their bank accounts flat at the end of the month.

A first step is admitting that you’re overspending. A problem is impossible to fix without first admitting its presence. Living without debt and the stress that comes with it can push an overspender toward reforming habits. Forbes suggested starting with a vision of the life you want and the inherent relief. It’s a focal point to moving from step one to step two and all adjustments beyond.

You wouldn’t do your own dental work at home if you needed a root canal. When making major changes to your finances, it’s best to seek professional help. Bankrate advised consumers looking to make a financial stratagem to hire a professional financial planner. While there are many types of planners, most Americans looking to make simple adjustments to their finances should use a certified financial planner.

Finding the right financial planner 

A friend’s recommendation is a fine place to begin, but in most cases checking the Financial Planning Associations directory is the best way to find an eligible CFP in your area. According to CNN Money, researching a CFP who’s right for you means understanding their pay structure and experience2 level. Certified financial planners work on either a commission- or fee-based pay structure. They may receive commissions for selling customers specific bonds or annuities. This can be an issue when crafting a budget plan for you, as it may be skewed more toward their financial success than yours. CNN advised hiring a CFP with a fee-based structure. This means you can expect a flat per hour rate or a 1 to 2 percent pay rate based on the amount of assets they handle for you.

Find a planner with experience working for customers in your income bracket. A CFP that’s done wonders for the rich and famous seems like a good recommendation, but if you’re not looking to invest big and they are unaccustomed to managing smaller assets, this can negate any advantages of hiring them.

Hire a certified financial planner for help creating a realistic budget.
Hire a certified financial planner for help creating a realistic budget.

Ask about their guidance style as well. When it comes to financial planning one size does not fit all. Reformed overspenders who need specific instructions as they change their spending plans need to know ahead of time if the CFP they’ve chosen only provides general information. Make sure a CFP understands your financial education level and whether or not you’ll need step-by-step instruction before hiring them to create your plan.

Making adjustments to a financial lifestyle is rarely a solo act. Children, a spouse or other family members must all be included in the planning. Have a family meeting to explain where spending will be scaled back. If the family vacation this year is going to be a smaller affair, be sure to set expectations. If your family often goes for fast food, it’s important to make sure everyone is aware that meals going forward will be made at home, or that school lunches will need to be brought instead of bought. Explaining the family financial plan can have positive effects on a child’s financial education and their spending habits in the future.

The views expressed by the articles and sites linked in this post do not necessarily reflect the opinions and policies of Cash Central or Community Choice Financial®. 


1Pew. (2015, Mar 5). Retrieved from: https://www.pewtrusts.org/en/about/news-room/press-releases-and-statements/2015/02/26/pew-survey-shows-americans-financial-worries-cloud-optimism

2CNN. (2017, Mar 24). Retrieved from: https://money.cnn.com/pf/money-essentials-hire-financial-planners/index.html

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