So, what we did was depend upon family, friends, and bankers and tax preparers to help direct our financial future.
Here are six common questions that people ask when it comes to managing their money…
- Should I hire a financial planner OR come up with my own financial plan?
Financial planners can help you organize your finances and come up with a long-term plan (like retirement, home improvement, college funds). If you are money savvy, there are plenty of financial planning tools that you can use online—and most of them are free.
- Should I hire an accountant OR should I do my own taxes?
If your taxes are pretty straightforward, you receive a W-2 form, regular deductions; it’s easier and cheaper to do them yourself. However if you are self-employed, receive commission or 1099 income, have rental properties or write off business expenses, then hire a professional. Tax laws change from year to year so if your taxes are a little more complicated, it’s better not to chance it – or worse, miss valuable deductions that you are entitled to just because you did not know about the changes in the tax code.
- Should I use a credit card or a debit card?
Use a credit card to get “rewards” like travel miles or money toward goods and services. However, be sure to try to pay a majority of the credit card off every month. Use a debit card if you have trouble managing your finances or controlling your spending.
- Should I write my own checks or schedule automatic bill paying?
If you have trouble paying bills on time, by all means schedule automatic bill paying through your checking or savings account. Even if your bank charges you to do so, it will still save you a ton or money in late fees—not to mention the damage late payment does to your credit score. Write checks for one-time expenses, like an emergency plumbing repair or school tuition.
- Should I get a credit card with a low rate and no perks — or a higher rate with lots of perks and rewards?
You are better off getting a credit card with a low rate. However, if you pay off the credit card every month and never miss a payment (oh, and want to go on trips), then go with the higher rate because by paying it off every month, the higher rate does not matter at all.
- Should I contribute to my 401K or pay off my bills first?
If your company matches your 401K contribution, only put in as much money as the company will match (a company match is like free money). If your company does not have a 401k matching program, pay off your credit cards, starting with the highest interest rate first, before contributing to your retirement fund.