Here are five basic guidelines by Ron Lieber that are useful in making just about any financial decision.

IT STILL MAY BE WORTH PAYING FOR HELP

Mortgages, taxes, college savings, insurance and debt are a few of the hugely important tasks we have to figure out in our financial lives.

Perhaps the best thing a versatile professional (i.e. a financial planner, accountant, stockbroker or lawyer) does is provide discipline. It is difficult to get most of this stuff done in the right way. Professionals make sure it all happens on time.

Most of us would rather avoid paying for help. Many financial planners charge 1 percent of a client’s assets annually for advice on anything and everything, including investing. So if you have $200,000 saved for retirement, that is $2,000 a year.

Amongst every hundred people only one prove to be wise and dedicated enough to manage his or her own financial problems by themselves. The rest could almost save on one percent if they want to but would not leading to the justification of annual fee.

For people without large portfolios or those who need help with something specific, there are financial planners who offer hourly rates.
EVERYTHING CAN (AND SHOULD) BE AUTOMATED One of the great consumer-friendly innovations in the world of money in recent years has been the automation of bill paying. Practically every utility, mortgage lender and credit card company has a way of getting its money each month without you lifting a finger.

This has a number of advantages: no stamps, no envelopes, no late fees. But the real advantage is that you don’t not have to worry about missing a payment.

Automated payments can have some hitches. It is tempting to neglect monitoring the bills once it’s automated. It is a pain to turn the whole bill-paying machinery off and on again if you switch bank accounts. And you need to be sure you have enough cash cushion in your primary checking account to prevent overdrafts.
INVESTING IS SIMPLE

 Investing boiled down: Index (mostly). Save a ton. Reallocate infrequently.

For most of us, investing in index mutual funds and similar vehicles — and sticking with them — is the hardest part of the mantra to accept. There are about 7,500 stocks on the three major exchanges in the United States and roughly 8,000 mutual funds. It would seem that with such an array of choices, we should be able to create portfolios that can outperform the market averages.

The fact is, however, besting the overall market in most investment classes is nearly impossible over long periods of time. Sure, it may be fun to try. But if you enjoy that sort of thing, do it with a tiny piece of your portfolio. And remember to call it what it actually is: gambling.

Overall, we should save as much as we can in a collection of low-cost index funds. Divide the money among stocks, bonds and other investments according to your time horizon and risk tolerance. Then adjust that allocation occasionally. Most experts agree that adjusting the mix more often than every 6 to 12 months is unnecessary and possibly costly.
PEERS MAY KNOW MORE THAN PROFESSIONALS

Financial planners may not have all the answers all the time. Moreover, they tend to be stronger on core areas of money management like insurance and taxes and less so on daily financial decisions.

Thankfully, a number of Web communities and blogs speaks to every aspect of spending and saving. Travelers and collectors of frequent-flier miles have FlyerTalk. FatWallet is terrific on credit cards. The Bank Deals blog, is a great resource for new high-rate account offerings. The Consumerist is for anyone who feels they got a bad deal from a particular retailer or service provider.

Reading all these sites regularly is impossible. But they are great for researching particular questions, and most of the expert consumers who congregate there are open to inquiries.
HAVE THE TALK

 As fewer people have pensions and more retirees live longer, an increasing number of people may need financial help from their children. The question is whether your parents will be among them.

Trying to pry financial information out of your parents does not make for a pleasant conversation. But the fact is, we should initiate conversation if they haven’t done so already. We care about our parents so we want to take care of them but if we do not know what is coming, we cannot help them plan for it.

Ask yourself, “what went well this year finacially?“ as well as “ what are areas that can be improved on regarding my finances?“ Being mindful of your financial past is a great start to reaching long-term financial goals.

By incorporating the important tips above, you have a better road map to succeed in managing your finances more effectively

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