Seeking Financial Advice: Where to Begin?

At the age of 26, and after three divorces, I find myself in a difficult financial situation with nothing much in my bank account. In order to address this problem, I recently opened a fund at a well-known financial institution. However, I am starting to experience significant financial setbacks. With no life insurance, no emergency funds, and no provisions for my daughter, my need for help and guidance is evident. So, where should I begin?

Finding yourself in such a challenging predicament can be disheartening, but there is still hope. According to Harrison Hinz, a certified financial planner at Spark Financial, the first step towards improvement is acknowledging the need for change. That being said, creating an action plan is crucial and seeking professional assistance might be beneficial in your case.

While many financial advisers offer guidance on an hourly or fixed-fee basis, Hinz suggests considering a financial coach given your particular circumstances. A financial coach can provide you with essential skills such as money management, budgeting techniques, and strategies for paying off debts. On the contrary, a comprehensive approach from a financial adviser may focus more on investment and areas of finance that might not pertain directly to your current situation.

To help with your financial organization and goal setting, you may consider utilizing the Financial Planning Association’s (FPA) pro bono network, which aligns with your medical and financial needs. By working with someone who can assist you in outlining your goals and managing your current situation, you will be able to focus on the immediate steps that can be taken towards long-term stability.

Alternatively, if you feel confident in tackling these challenges on your own, it is important to avoid becoming overwhelmed by trying to solve everything at once. Alonso Rodriguez Segarra, a certified financial planner at Advise Financial, recommends starting small and taking step-by-step actions that are realistically achievable before moving on to the next level.

Seeking financial advice is a worthy endeavor, and taking the first step towards a better financial future is commendable. Remember, with the right guidance and perseverance, you can regain control of your financial well-being.

Establishing a Monthly Budget: Understanding Your Finances

Establishing a monthly budget is a crucial aspect of comprehending your financial situation. It is important to determine the source of income, whether it is Social Security disability or any other form. Additionally, identifying areas where expenses can be reduced is key. Ryan Haiss, a certified financial planner at Flynn Zito Capital Management, advises against investing in the stock market until an emergency fund has been built.

Building an Emergency Fund

To ensure financial security, it is advisable to open a high yield savings account that covers at least one month’s worth of expenses. Accumulating three months’ worth of expenditures provides an even stronger foundation. After achieving this milestone, one can then explore investment opportunities using a diversified and low-cost portfolio tailored to their profile. If you want to find out about the highest savings account rates available, click here.

The Importance of an Adequate Emergency Fund

Experts widely agree that maintaining an emergency fund equivalent to 3 to 6 months of essential expenses is a prudent starting point. Once consistent savings are established each month, further options such as investments or life insurance can be explored. However, it is important to note that investing in stocks should be approached with a time horizon of 5+ years, as cautioned by Haiss.

Prioritizing Your Finances

Rushing into the stock market or expecting instant wealth is ill-advised. Building up an emergency fund should take precedence over investments, while also ensuring that credit card debt is avoided. Segarra emphasizes the significance of this approach.

The Option of Bankruptcy

Depending on the circumstances, bankruptcy may be a viable solution. Certified public accountant (CPA), Howard Dvorkin, chairman of Debt.com acknowledges that bankruptcy exists for individuals who find themselves in difficult situations despite their diligence and effort. Speaking to a bankruptcy attorney becomes imperative in such cases.