Financial Planning Misconceptions

In this era of DIY, we’ve grown accustomed to doing professional-level work on our own, whether it’s concocting “Top Chef”– worthy weeknight meals, renovating our homes or crafting up a storm.

After all, can’t you discover most things nowadays by pulling up a YouTube tutorial?

Not everything can be properly captured in a five-minute video– especially when it comes to something as important as your finances. When your money and future are at stake, there’s nothing wrong with asking for a little help.
“Some folks think because they picked an investment or two in their 401(k)s that they are qualified [to be their own adviser],” says Holly Wolf, a chief marketing officer for a bank in Chester Springs, Pa., who has worked with professional financial planners for about 20 years. “You may be able to repair your car yourself or fix your own roof, but you probably don’t have the expertise to watch your money like a hawk.”.

When she realized that she and her husband were doing a good job feeding their nest egg– but not enough to help it grow, Wolf first reached out to a planner. “When we started investing, we had no experience and I needed someone to guide us,” she says. “We had the savings part down, but not how to make our money work for us.”.

Not everyone is as willing and ready to reach out for financial guidance: A survey by Charles Schwab found that one in three people don’t seek any outside input when it comes to managing their money.

And, in large part, that could be due to some prevalent myths and misconceptions people have about using a financial adviser.

In honor of Financial Planning Week, we’re helping to bust some of those mistaken notions in the hopes that you’ll be less tepid about seeking advice for your own money goals.

Myth No. 1: Only rich people need financial planners.
“Financial planning is for anyone who wants to organize their finances, set money goals and make a plan to reach those goals,” says Ann Arceo, president of Savvy Duo Financial Planning. “While it’s true that there are some financial planners who target wealthy clients, there are a growing number who provide affordable advice– regardless of a client’s net worth or income.”.

Part of this misconception may be rooted in the fact that people often lump financial advisers into the same category as other professional service providers, such as attorneys, who often charge expensive retainers.
Price is one of the biggest factors to discourage people from seeking help from a financial pro. In a recent TIAA-CREF survey, 44 % of respondents said that they thought good financial advice would cost more than they could afford.

The reality? “There are professionals who work with younger individuals and middle-class families on a fixed-fee or hourly basis,” says Eleanor Blayney, a consumer advocate with the CFP Board.

So if you’re unsure of whether you can afford a planner, be honest about the budget you’re working with and ask about that person’s fee structure. She may be able to recommend someone who can if the planner can’t work with you.
Myth No. 2: My finances are simple– I can just go it alone.

You might not have a lot of different assets to manage, but it’s possible that your finances are more complex than you realize.

Parents with young kids usually recognize that they need to buy life insurance in order to protect their new family. According to Arceo, what they often overlook is disability insurance, which can help cover some lost income if one or both parents are suddenly unable to work due to an unexpected illness or injury.
A financial planner could offer that type of insight, possibly bringing up options you may not have discovered on your own. Plus, even if you truly believe you have an uncomplicated money life, it never hurts to have a second opinion on your progress.

“The idea of having [an adviser] working with you throughout various stages of your life is akin to seeing a doctor over time for annual checkups,” says Erik Klumpp, founder of Chessie Advisors. “The relationship you build with your doctor helps you spot a disease in its early stages, instead of just going to a doctor after you’re in tremendous pain.”.

Myth No. 3: Financial planners help people only with investing.
While investing will likely play a key role in building your portfolio, a good financial planner should be able to help you with your whole money life– including budgeting, insurance, estate planning and retirement planning, among other areas.

In fact, if you find that you’re working with a financial advisor who isn’t providing enough comprehensive advice, don’t be afraid to consider someone new.
That’s what Wolf did.

“I liked [our previous financial adviser] and his performance was good, but he never showed us the big picture,” she explains. “I would ask him if we were on target to hit our retirement goals, and his answer was always ‘yes,’ but he never showed me how. [Our new planner] meets with us quarterly, and we have a very detailed plan for estate, retirement and insurance planning.”.

Myth No. 4: Once I hire a financial planner, I don’t need to do anything.
Don’t think that after just a few meetings your work is done– in fact, you’re probably barely past the paperwork phase. “We can do a lot for you, but we can’t make you spend less and save more,” Arceo says. “You have to be willing to make the effort.”.

“One benefit of seeing a financial planner is getting your affairs organized and streamlined, but that’s only the beginning,” Blayney says. A good financial planner will require your input, and want to partner with you. “After all, it is your life goals that you’re working on,” she adds.
Expect to do some of the legwork required to set your plan in motion. Your planner can’t increase your 401(k) contributions for you, change your tax withholdings, or decide whom to name as beneficiaries on your policies– those are all in your control.

,” says Holly Wolf, a chief marketing officer for a bank in Chester Springs, Pa., who has worked with professional financial planners for about 20 years. Wolf first reached out to a planner when she realized that she and her husband were doing a good job feeding their nest egg– but not enough to help it grow. “We had the savings part down, but not how to make our money work for us.”.
“One benefit of seeing a financial planner is getting your affairs organized and streamlined, but that’s only the beginning,” Blayney says. A good financial planner will require your input, and want to partner with you.

Purposes of Taxation.

Financing government spending:.

Taxes are validated as they fund government expenditure and activities that are beneficial and necessary to society.
Reduce gap between rich and poor.

Progressive taxation can be used to reduce inequality in a society. According to this view, taxation in modern nation-states benefits the majority of the population and social development. Progressive tax system where higher income groups have to pay more tax is an effective way of reducing inequality of income.
Reduce consumption of demerit Goods.

Taxes can be used as an effective tool to reduce the consumption of demerit goods like alcohol and tobacco. Higher taxes on these goods reduce the consumption. Examples include cigarette tax and excise duty.
Control Inflation.

One of the causes of inflation is ‘too much money chasing too few goods’. Government can take away the extra disposable income of the people through higher taxes and thus reduce the aggregate demand in the economy and resulting in low inflation rate.
Balance of payments.

Tariffs are taxes on imports. Government can correct an unfavourable balance of payment situation by increasing the tariffs. This will result in imports becoming expensive and will cause a fall in demand for the imported goods.
Protecting local industries.

Government uses taxes as a mean to protect local/infant industries. Increasing tariffs on imports and charging lower taxes to local/infant industries may boost the demand for services and goods produced by domestic industry.

Progressive tax system where higher income groups have to pay more tax is an effective way of reducing inequality of income.

Taxes can be used as an effective tool to reduce the consumption of demerit goods like alcohol and tobacco. Higher taxes on these goods reduce the consumption. Examples include cigarette tax and excise duty.
Tariffs are taxes on imports.

Management Accounting

We know that monitoring business performance is crucial to the health of your business, but how do we do it? Reports, reports, reports. Management accounting includes putting together cash flow statements, accounts payable, accounts received, budgets and expense reports. There is no real rule as to what reports you need to create or use to manage your business. It’s all up to you and determined by you, and your business needs.

If you have a considerable amount of customers who owe you money (like a payday loan business) you are obviously going to want to have very well-designed account received reports. Accounts received reports show you who has paid, when they paid, how much more they owe in addition to who hasn’t paid, who’s overdue and what the total amount you are owed is. Knowing this information can help you tremendously as you move forward with business decisions.

Accounting is an information science used to collect, classify, and manipulate financial data for organizations and individuals.

An accountants in springwood is a professional person who performs accounting operations such as audits or financial statement analysis in corporation and business. Accountants in springwood can either be employed with an accounting firm, a large company with an internal accounting department, or can set up an individual practice.