Financial Planning: Can You Do It Yourself?

Here are five attributes you need for DIY money management

The financial advice field is booming. From robo-advisors to banks, brokerages to independent financial advisors and financial planners, it seems that everywhere you look, there’s someone clamoring to manage your money. Does everyone really need to hire a professional to manage their finances? The answer to that question is: not necessarily.

No one works for free, after all, and if you hire a financial advisor, you will pay for that service in one way or another—even if you opt for a low-cost robo-advisor. With a modicum of intelligence, the right amount of time, and some dedicated study, you may well be able to manage your money yourself.

Below is a quick list of five criteria to determine if you have the makings of a financial DIY-er.

Key Takeaways

  • If you want to manage your finances yourself instead of using a financial advisor, you’ll save on costs, but you’ll also need to read up, stay disciplined, and take it seriously.
  • To be a financial DIY-er, you should be able to spend time tracking your financial situation and enjoy researching and learning about financial topics.
  • You should also feel comfortable making financial decisions and be able to stomach the invariable ups and downs of investments.
  • In particular, you should become savvy about retirement accounts and be able to fund them to the max.

1. You Enjoy Reading and Learning About Financial Topics

There are scores of books, courses, and resources to educate consumers about personal finance. If topics like taxes, investments, loans, and other money management matters interest you and you have the time to become financially literate, you may be well suited to managing your own money.

2. You Have the Time to Review Your Present Financial Situation

If you are good at tracking your spending, saving, and investing, there’s a strong likelihood you may be able to serve as your own financial planner. The first step in wise money management is the successful tracking of your money; the second is saving. And if you’re managing your debt well, you’re already making wise financial decisions.

3. You Are Comfortable Making Financial Decisions

This means being comfortable making financial decisions not only now and for the near future but also for retirement. You may not have a lot of money now. However, if you have a job and are saving and investing, at some point, your wealth will grow into six figures and maybe even more.

If you feel comfortable managing large sums of money, you may not need an advisor. If the amount eventually grows too big to handle, you can always switch gears and hire someone on a limited or long-term basis.

It’s worth learning how to use financial software because these tools can do the number-crunching for you and generally make it easier to plan for future goals and retirement.

4. You Don’t Need Financial Hand-Holding

You should be at ease with market volatility and be able to handle the ups and downs to which every investment is prone. When serving as your own financial advisor, it’s important to be comfortable watching the value of your investment portfolio go down on occasion. If you can stomach market volatility on your own and won’t feel compelled to panic-sell during regular market declines, you may not need an advisor.

5. You Understand the Importance of Retirement Accounts

You should know how accounts such as a 401(k) or 403(b) and traditional and Roth IRAs work and be savvy enough to contribute to them to the max. If you are on the path to saving and investing, maintaining a diversified portfolio, and confident you can remain invested through market peaks and valleys, you may be well suited for do-it-yourself financial planning for retirement.

What Should a Financial Plan Include?

A financial plan can cover a variety of components. The most critical ones, key to almost any plan, include:

  • Determining net worth
  • Setting overall financial goals
  • Budgeting and accounting for cash flow for expenses
  • Managing debt and taxes
  • Planning for retirement
  • Maintaining emergency funds
  • Insurance coverage
  • Estate planning

What Is Retirement Planning?

Retirement planning refers to financial strategies to save, invest, and ultimately distribute money meant to sustain yourself after you cease working full time. Ideally a lifetime process, it includes identifying sources of income, sizing up expenses, implementing a savings program, and managing assets and risk. Retirement planning takes into account not only assets and income but also future expenses, liabilities, and life expectancy.


Why Is Financial Literacy Important?

Financial literacy is the confident understanding of concepts regarding money that affect individuals: saving, investing, and debt. It involves everyday topics such as understanding how a checking account works, what using a credit card really means, and how to avoid unreasonable and unnecessary expenses and obligations. Possessing such knowledge can have a material impact on families as they try to balance their budget, buy a home, fund their children’s education, and ensure an income for retirement.

The Bottom Line

It’s imperative today to make sure your personal finances are in order, from retirement saving to tax planning—and doing it wrong can get you in big trouble. Professional financial advisors help alleviate the burden with skilled and knowledgeable advice and practice. But they can be expensive.

Doing it yourself involves learning some technical details, but money management and investing aren’t rocket science. Individuals often possess the drive and skill set to plan for themselves when it comes to personal finances. By learning personal finance and investing basics, and remaining levelheaded and consistent in your money activities, you may be able to accumulate wealth without paying a financial advisor.

If you’re a disciplined spender, saver, planner, and investor, you may be competent enough to manage your own finances. By doing it yourself, you’ll save on costs. But you’ll also need to read up, stay focused, and take it seriously—for the course of your life. If you can't, then it might be time to pay the pros after all.

Article Sources

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  1. Internal Revenue Service. "Retirement Topics - Contributions." Accessed Oct. 14, 2021.

  2. Charles Schwab. "8 Components of a Good Financial Plan." Accessed Oct. 14, 2021.