A Fee-Only financial planner does more than examine your budget or prepare your taxes. He or she takes a holistic approach to helping you figure out what your financial goals are and what steps you need to take the reach those goals.
One way they do this is through talking to you about your lifestyle and your approach to managing your money. If you tend to overspend, don’t hide it from a financial advisor because it will be hard to get the results you want if you are undermining a financial plan.
In “The Most Serious Threat When Using Credit: You,” The New York Times (NYT) discusses how rather than fear identity thieves as the sole threat to financial stability, “…we should concern ourselves with the way we quietly chip away at our own net worth by using credit cards too much in the first place.”
The further we get away from countable coins and dollars, the easier it is to spend and feel removed from the consequences. The NYT cited studies that found that we are willing to spend more on products and experiences using a credit card. In interviewing some of the authors of these studies, the NYT found that even with all of their research, some of them were vulnerable to overspending.
One area where people are especially vulnerable is rewards. Whether it’s points or airline miles, consumers get excited seeing rewards add up. Sometimes we spend more in anticipation of adding to the reward total. One author cited went so far as to suggest that, “…any credit card use in pursuit of rewards is just further evidence of our continuing delusions about our own self-control.”
Working with a Fee-Only financial advisor will offer the chance to get expert advice and have another, more objective person hold you accountable for your spending.