Does everyone need to hire a professional to manage their finances? After all, 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. But the answer to that opening question is: not necessarily.

With a modicum of intelligence, the right amount of time, and some dedicated study, you may be able to do it yourself. No one works for free, after all, and if you hire a financial advisor or choose a robo-advisor, you will pay for that service in one way or another.

Key Takeaways

  • It’s imperative today to make sure your personal finances are in order, from retirement saving to tax planning—but doing it wrong can get you in big trouble.
  • Professional financial advisors help alleviate that burden with skilled and knowledgeable advice and practice, but this comes with a fee.
  • If you want to do it yourself, you’ll save on costs, but you’ll also need to read up, stay disciplined, and take it seriously. A low-cost robo-advisor may be your best bet.

Do It Yourself?

Individuals often possess the drive and skill set to plan for themselves when it comes to personal finances. Below is a quick list of five criteria that may mean you’ll be OK on your own.

1) You enjoy reading and learning about financial topics

The list should include taxes, investing, loans, and personal finance. There are scores of books, courses, and resources to educate consumers about personal finance, investing, and planning. If you like this topic and have the time to dig in, 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

Not only are you comfortable making financial decisions, you are also confident about planning for retirement. You may not have a lot of money now, but 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.

If you’re able to use financial software, you probably can learn to plan for future goals and retirement.

4) You don’t need financial hand-holding

This means that you are comfortable with market volatility and can handle the ups and downs of the investment markets. 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 sell during regular market declines, you may not need an advisor.

5) You understand the importance of maxing out retirement vehicles

This includes accounts such as a 401(k) or 403(b), and even a Roth IRA. As long as 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.

The Bottom Line

Money management and investing isn’t rocket science. If you’re a disciplined spender, saver, planner, and investor, you may be competent to manage your own 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 for a financial advisor.