While many Americans keep track of their own finances, many others rely on a financial advisor to do it for them. Money management can be stressful, and outside help can alleviate some of that stress.
No matter what position you’re in, however, you should never be 100 percent hands-off with your money. Forbes contributor Liz Davidson shares three things to know about money:
Know your advisers. Know how they are compensated so you can identify where they may have conflicts of interests or biases toward certain products, services and/or fund companies. Are they compensated by collecting commissions on products they sell or do they just charge fees? Know their background and track record. You can go to finra.org or cfp.net to run a background check and determine if your adviser has any complaints or disclosures on his/her record.
Know what you are worth (net worth = all your assets minus all your debts) and track that on a quarterly basis. Over time, your net worth should increase as you save and invest and pay down debts. If you see a steady decline in your net worth, and if it’s hovering dangerously close to zero or worse, if it’s negative, then it’s time to pay down the debt.
Know what you are making, what you are spending and what you owe. Make sure that your debt payments are less than 36 percent of your income and do what you can to eliminate all high-interest rate debt.