I’m a Financial Advisor, but I Still Have Trouble Mastering These 6 Money Moves
Written by
Jamela Adam
Edited by
Chris Cluff
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Even those who seem to have it all figured out don’t. Like their own clients, financial advisors often fall victim to the same behavioral biases and end up making questionable or impulsive financial decisions.
GOBankingRates asked R.J. Weiss, CFP, CEO of the personal finance site The Ways to Wealth, to share the money moves he’s still working to become better at.
Investing Outside of Index Funds
One money move Weiss still has trouble mastering is minimizing risk in his investments.
“I like the risk,” he said. “Over 90% of my investable net worth is in index funds. I’ve also permitted myself to invest up to 10% into whatever I want — ranging from crowdsourced real estate to individual stocks — and if it gets over 10%, I’ll rebalance.”
Because index funds are already diversified, investing in them involves lower risk than owning a few individual stocks. But still, like any investment in the stock market, index funds are subject to market risk.
Avoiding Lifestyle Creep
“Keeping your expenses manageable while income rises is far easier to discuss than to practice yourself, because, of course, you want to reward yourself for your hard work,” Weiss admitted.
So, even though he often advises his clients to keep their budgets under control and avoid falling victim to lifestyle creep, he still finds it challenging to follow his own advice.
Unfortunately, lifestyle creep is a phenomenon affecting not only Weiss but Americans of all income levels — over half of those making six figures live paycheck to paycheck because of it.
Considering Ancillary Costs
Don’t forget the costs.
Weiss said, “For example, when planning a vacation, I typically account for major expenses like hotel stays, airfare and car rentals, and I also factor in an estimate for food and entertainment. However, I often fail to pay attention to ancillary costs, leading to spending significantly more than anticipated.”
Some of these overlooked expenses include transportation to and from the airport, pet sitting fees for his dog and, during the summer months, hiring someone to mow the lawn.
“These add up and make a vacation far more expensive than I originally planned,” he explained.
Setting Financial Boundaries
Without setting clear financial boundaries with your friends or family members, you could put yourself in a shaky financial position, especially if you’re already struggling to stay afloat. Weiss admitted that he personally has trouble doing so with his children.
“Kids are hard to say no to, since you want to give them everything and let them do anything,” he said. “Setting boundaries with them has been extremely challenging, and it’s something I often discuss with my spouse.”
Discussing Finances With a Partner
“As someone deeply entrenched in finance, I have a detailed and clear vision of our financial future and of what I want things to be. And, while my spouse and I discuss money often, she’s not thinking about finance daily like I am,” Weiss said.
He explained that, while he and his partner are on the same page about the big stuff when it comes to managing money, he could do a better job of letting go of the small stuff.
“Of course, she’s usually right when she questions my thinking, and it’s the best decision for our family, but it often goes against what I had in mind,” he added.
Buying the Right Amount of Insurance
“Determining the right amount of insurance to buy has always been a tricky thing for me. As someone who’s analytical, I’d often prefer to invest more than spend more on insurance, with the idea being that my family would be better off in the long run,” Weiss explained.
As the sole income provider for his family, Weiss understands the importance of having life and disability insurance. However, he also admitted that it’s challenging to put himself in someone else’s shoes and find the right balance between purchasing enough insurance for the short term and ensuring that his family would be financially taken care of if something happened to him.
Financial Advisors Are Human, Too
Financial advisors are human, too, which means they’re not immune to the challenges and complexities of managing their own money. Just like their clients, they often face temptations to deviate from their well-laid financial plans, and it’s oddly comforting to know that even financial experts have their moments of struggle.
All in all, no one has it all figured out. The journey to financial mastery is a continual learning process for everyone — advisors included.
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