April is National Financial Literacy Month. Today, the majority of consumers are experiencing some sort of financial difficulty causing a significant impact on their everyday lives. According to financialliteracymonth.com, Americans carry more than $2 trillion in consumer debt, and 30 percent of consumers report having no extra cash, making it impossible to escape the burden of living paycheck to paycheck.
Corenne Gutierrez, marketing coordinator, sat down with Lance Campbell, CPA, partner-in-charge of the Hawkins Ash CPAs Rochester office, to get his thoughts on financial management.
What is the biggest mistake people make when it comes to personal finances?
People spend, spend, spend and just do not save enough. Many people do not have long-term goals when it comes to savings.
I’ve done nothing with financial planning or wealth management. Where do I even begin?
When I have clients such as individuals or business owners with this problem, the first thing I do is discuss the best options from a tax standpoint. Afterward, I refer them to financial advisors that can help get a game plan implemented. I like to work with the advisor so we can best serve the client from a tax and investment standpoint.
Give me three reasons why a person should hire a professional?
First, it is time consuming for an individual to manage and execute a personal financial plan. Second, if you are a business owner, you have many retirement options to assist you and your employees. You need to work with a tax CPA and financial advisor to maximize your retirement plan. Third, as a CPA I work closely with financial advisors. I see how they help individuals and business owners. Even though I deal with finances as a tax CPA, I hire a professional to manage and invest my finances.
What are some questions every prospective client should ask when searching for a professional?
When my clients look for referrals, I recommend they interview a handful of financial advisors. They need to feel comfortable with the advisor’s personality and values. Ask how the financial advisor charges for services. Find out what type of professional credentials the financial advisor holds, such as a Certified Financial Planner (CFP.) Ask what the advisor’s past performance history has been and what type of investment strategies the professional likes.
Give us three basics you’ve learned, the quick lessons you stress to your family and friends.
First, start investing early. You may think retirement is many years away, but starting early allows the magic of compounding interest to work. Second, set a budget. By having a household budget in place, you can manage your finances and control your spending. Third, don’t watch the market every day. You are saving for a long-term goal. The markets will go up and down, but if you stay the course, you can build up a nice nest egg over time. I emphasize to my kids that everything comes with a price tag and that you have to make decisions on what you actually need vs. want today. As a CPA, I tend to be more on the saver side.