Choosing a financial advisor can be one of the biggest decisions you’ll ever make. It’s important to choose one that is a good fit for you and your financial goals. You’ll want to interview several before making a decision about who you want to work with. And one of the most important things you need to know is whether or not they are a fiduciary. Most people though, don’t know to even ask this question of advisors they are interviewing. Here’s what you need to know . . .

The word fiduciary basically means “trust”, especially in a relationship between a trustee and a beneficiary. With a financial advisor, it means they are legally and ethically obligated to act in his or her clients’ best financial interest, even if it means less or no compensation for them.

In a survey of 200 independent financial advisors regarding their fiduciary standard, there were a few surprising results.

• 80% of the advisors surveyed consider themselves to be fiduciaries. But over 80% of those considering themselves to be fiduciaries disagreed with the statement “Fiduciary oversight is applied consistently to all my clients.” The key word being “consistently”.
• And 75% of those surveyed said that acting in their client’s best interest defines them as a fiduciary.

Most advisors though agree and understand that acting in their clients’ best interests is the definition of the fiduciary standard.

The fiduciary standard was established as part of the Investment Advisors Act of 1940. Advisors can be regulated by the SEC or state security regulators, but both require them to uphold the fiduciary standard, specifying that an advisor must place their client’s best interest above their own and that investment advice is given based on accurate and complete information.

It’s important to understand that a financial advisor who is a fiduciary is different than a stockbroker. The biggest difference is that stockbrokers don’t have to be held to the same fiduciary standards and they often offer investment advice that will benefit them as well, including forms of compensation and commission. Stockbrokers can market themselves by many different titles, including financial advisor, so it’s important to ask.

A few titles to know and understand are:

Investment Advisor – they follow the Investment Advisors Act of 1940, they are required to be certified and they are regulated. They are also held to a higher standard, including fiduciary duty. They use a number of titles including Investment Manager, Wealth Manager, and Portfolio Manager.

Stockbroker – they are subjected to lower legal standards, but they are licensed and they are also regulated by the SEC and state regulators. Most call themselves Financial Advisors or Wealth Managers and they usually work for large Wall Street brokerage firms.

Dual Registration – this title can be a little confusing and misleading because many financial advisors today serve as both Investment Advisors and Stockbrokers. Most people working for large brokerage firms fall under this category and which title they decide to work under depends on how much they want to make on any given day. The biggest issue for potential clients is that dual registrants are held to the lower legal standard of the stockbroker.

To be sure your hiring someone who has your best interest in mind, check their website for their disclosure information and ask important questions like:

• “Will you be serving as my fiduciary?”
• “Are you legally obligated to protect my best interests?”
• “Will my account be an advisory account or a brokerage account?”

Doing your homework before hiring an advisor will help you to make sure that your interests are protected.

Finding a financial advisor can be difficult, especially if you haven’t worked with one before and don’t know what to ask. Even if you already have an advisor, it’s always good to check in with them and make sure you understand what kind of service they’re providing.

When looking for a good advisor, it’s first important to make sure you know what you’re expectations are. Do you want someone to handle all of your investments, prepare your financial documents like wills, trusts, and even do your taxes, or do you just want someone to give you some advice and suggestions? Maybe your expectations are somewhere in between. Before you can hire the right person for your needs, you have to know what those needs are.

Now that you’ve done that, it’s time to start interviewing a few advisors and find someone who you feel that you can trust to handle your financial needs. Here are a few questions to ask potential advisors to make sure you’re getting the information you need.

What’s your background?

Look for a Certified Financial Planner (CFP), not brokers or insurance agents. You want to make sure the person you hire has the right qualifications to do the job.

How much experience do you have?

Are you looking for someone young who knows all the new information available and can handle your finances for years to come, or do you want someone older who has seen difficult economic situations and has the experience to navigate their way through them?

Do you accept fiduciary responsibility?

This may sound like a complicated legal term, but the bottom line is that it means they are making decisions based on what’s best for you not based on any bonuses or advantages they may receive. They should be willing to accept this responsibility through a written statement that they sign for you.

What services do you provide?

You’ll want to make sure you’re hiring someone who provides all the services you’re looking for. Do they offer retirement and estate planning? Insurance? Can they manage your investment accounts? Do they offer advice on planning that you can use to manage your own funds? Make sure you know what you’re hiring them to do.

How do you charge?

This is something you’ll definitely want to have a clear understanding of. Do they charge a fee for each individual service? Or do they charge a percentage of the funds they are investing? You may need to do some calculations on your own to determine which is better for you.

Do you offer different investments based on your clients risk factors?

You’ll need to have an understanding of your risk tolerance. For instance, if you’re young and won’t be retiring for more than 20 years, you may have a higher risk tolerance for your funds. If you’re older and close to retirement, you may not want to take as many risks with your finances. Different investments come with different risk tolerances so you’ll want to make sure you hire someone who can work with yours.

What kind of investments and planning do you recommend?

Different advisors will have different answers to this question. Make sure you work with someone whose answer matches your needs. Someone who recommends a variety is probably your best option. Look for things like real estate investments, bonds, index funds, and money markets. Someone who thinks about short-term investing as well as long-term investing is looking at the big picture of your financial future.

Lastly, get recommendations from friends and family of people they trust to work with and make sure whoever you hire is reviewing and evaluating your needs on a yearly basis as your financial situation will change over time.

Buying a new home is always an exciting time.  It’s a place to enjoy time with friends and family, a place where you’ll spend some quiet downtime, and maybe even a place where you’ll raise your kids.  But if you’re not careful, you can unexpectedly find yourself being “house poor”.  The term “house poor” refers to the many hidden costs associated with home ownership that many people don’t think about before purchasing.  Especially if this is your first time; you may not even be aware of these costs.  While your dream house may seem affordable, beware of unexpected expenses.

?

According to Zillow:

• The average home owner spends over $9,000 a year on maintenance expenses and other unplanned expenses
• Home owners insurance, property taxes, and utilities can average about $6,000 a year
• If you want to hire someone to help maintain your yard, clean carpets, or pressure wash your house, you can expect to pay about $3,000 a year for these services

If you haven’t added these items to your budget, you could find yourself in some financial trouble.  They account for as much as an extra $1500 a month to your budget!  That’s a lot of extra money.  And we haven’t even talked about furnishing your new home.  Those costs need to be added in as well.

But, don’t get stressed out just yet.  There are several things you can do to avoid finding yourself in house-related debt. When planning for a home purchase, keep these tips in mind:

Calculate all the costs.

Do your research to avoid becoming “house poor”.

There are several costs of homeownership that most people don’t consider. Be different!  Do your research and know the full picture.  While the mortgage payment may be well within your budget, you may be suddenly surprised at all the other expenses involved.

Research these extra expenses before signing a contract.

• If your new home uses propane for heat or cooking, this is an added utility bill that you may not have accounted for. Depending on the size of your home, propane usage for heat can average $2000 – $3000 per year.
• Not all homes have this service, but check to be sure.
• The average water bill varies depending on the number of people showering and how often you do laundry or run the dishwasher.  But expect to pay anywhere from $80 – $200 every quarter.
• The larger your home and the more things you keep plugged in and turned on during the day, the higher you can expect your bill to be.  Keep in mind that it will most likely be higher in the summer and winter if you run the air conditioning and heat.
• Depending on where you live, this may be rolled in to your county taxes but be sure to check.
• Property taxes. The cost of property taxes can vary depending on the area you live in. Most counties provide online tax records so do your research for the home you’re considering.
• Homeowners insurance. Your mortgage company will most likely require this, but it can be rolled into your mortgage payment. Keep in mind though; this will increase your monthly payment.
• Maintenance and repairs. Always have an emergency fund for anything unexpected.
• Home Warranty. This will help to cover any major repairs, but there is usually a service fee for each visit on top of the annual fee, which can run anywhere from $500-$1500 a year.
• Home owners association. If your community has a homeowner’s association, you’ll receive a quarterly bill for neighborhood upkeep.

Most prospective home owners can expect to be approved for a mortgage of around 30% to 35% of their salary before taxes.  But there are many other fees to consider.  Usually, your realtor or the sellers realtor can provide the average cost of these expenses for the home you’re considering so be sure to ask.

This is a guest post from Pauline of InvestmentZen.com

For as much you may think in the grand scheme of things, your little daily habits won’t make or break your retirement and savings plan, they might. Let’s have a look at how much bad habits can cost you over the long term.

You smoke (drink, eat too much junk food,…)

We all have a soft spot for something we like to indulge in once in a while. But if the habit is too frequent, it can cost a lost of money.

• At $6 a pack, smoking 10 cigarettes a day will cost you $1,095 a year.
• A $8 burger meal every week day instead of brown bagging leftovers costs $1,920 a year.
• $20 worth of drinks every Friday and Saturday cost $2,080 per year.

If you quit smoking, bring lunch to work and have one $5 drink on Friday and Saturday, you can save $4,575 per year!

You carry a balance on your credit card

Paying 18% interest on a $1,000 balance is costing you $180 per year. Oh, that’s “only” $15 per month? Yes, that is one meal you don’t get to share with your friends, or two months of Netflix, just because you are paying in arrears for stuff you have long used or eaten.

If you carry a balance, get a 0% balance transfer card, and what you used to pay in interest can be used to crush your balance instead.

You are lazy

Laziness can cost you a lot of money, because you overpay for convenience. Instead of staying on top of your bills, you forget to cancel that gym membership month after month. And the storage unit is full of things you will never use, but you keep paying for it. You rarely watch TV yet you have a $39.99 cable subscription.

You never challenge your utility bills once the new customer incentive is over. You may be paying hundreds of dollars more every year for the same service, because you didn’t call your provider to ask for a discount.

You get take out every night because you don’t want to cook at home. These habits are easier than you think to get rid of. Start by one little thing. Call the bank to stop the gym payments. Empty the storage unit. Tackling one thing at a time will help you gain momentum and save you a lot of money.

You don’t have a retirement account

Investing for your retirement is something you should start as soon as you enter the workforce. Yes, that sounds crazy, but it is much easier to plan for retirement over 40 years than over 15. Not having a retirement account means your cash is probably earning you nothing on a 1% savings account, instead of being invested in the markets. Opening a brokerage account is much easier than you think, and if you have a company match on your contributions, you should get started right now and stop passing out on the free money!!

Start by funding your 401k and Roth IRA, then if you have any more money, you can invest through a regular account.

You don’t plan ahead

YOLO and being in the moment is a ton of fun, but it makes me want to bang my head against the wall when I see my friends going on the same holiday I am, but it cost them twice as much. Why? They failed to plan ahead. I book my flights and accommodation months in advance to get the best deals when I go somewhere. If I go hiking, I carry snacks and water so I don’t have to pay extra for the convenience of a vending machine. When I pass by a cheap gas station, I fill my tank, so I don’t have to drive 10 miles when the empty tank warning lights up. I buy discounted winter clothes in the spring for the following winter.

Planning properly includes saving for big expenses (Christmas, car repairs,…) in advance so you don’t have to charge your card. Doing regular maintenance on your water heater, AC units, car and other appliances so they don’t break down. It includes having proper insurance so a health emergency doesn’t bankrupt your family.

Not planning means you’ll have to pay a lot more for the same products and services. All that money spent for nothing is money you don’t get to save for the future, and money you need to earn by sitting longer at your desk. How about forming better habits instead?

If you are looking for financial advice, you probably don’t have money just lying around to be spent.  There’s a lot you can do before you shell out for a financial advisor! So, how can you get that advice for free? Here are five different websites with excellent financial advice available at no cost.

Rockstar Finance

Subscribe to Rockstar Finance to get your feet wet in a little of everything financial. Rockstar Finance has a great blog, a list of money saving challenges to consider, book reviews on great financial reads, and a whole slew of reviews and information on financial apps and services. Whatever you are looking for, they probably have right on their website free of cost.

How Do I Money

Check out this awesome finance website for great blogs, podcasts, books and more. One thing that makes them unique is their video series on Budgeting; definitely worth giving a watch. How Do I Money also offers four money spreadsheets on their site that help with budgeting, dealing with debt, saving money and more. These sheets are a great tool for those trying to get a better handle on their finances. Print them off and use them each month as you budget.

Making Sense of Cents

If you want to make sense of money, this is the blog for you! Michelle has a consistent blog that covers a wide variety of topics: saving money, making extra income, paying off debt, and tips for traveling. She loves to travel, and gives expansive advice on how to do that while sticking to your budget. If you have struggled in the past with your personal finances, this blog has plenty of tips explaining what you could be doing wrong and how to turn things around. Check out 15 Reasons You’re Broke and Can’t Save Money for a personal favorite of mine.

Stefanie O’Connell

Stefanie is an expert on helping millennials become personal finance professionals. Her blog and videos are interesting and informative, covering topics such as “Three Mental Roadblocks to Making More Money” and “3 Ways to Earn a Pay Raise.” If you’re a millennial looking to achieve financial greatness and to be money savvy, she’s the gal for you!

Burke Does

I may be slightly biased, but Emilie Burke has some great financial advice. (Yep, that’s me.) My website offers tons of free advice that will help you get your budget on track and find better ways to save money. Burke Does is a lifestyle blog that specializes in personal finances and millennial struggles. I write about the balance between overcoming debt, staying healthy and enjoying life along the way. Check out my latest blog, Knowing Your Why When Paying Down Debt, to discover the importance of knowing your motivation while freeing your life from the weight of debt.

Bonus Tip

Pinterest has tons of resources for financial advice. A little searching can lead you to endless financial tips and tricks to help you save money and budget well.

Whether you’re started a fund for emergencies, splurged on a trip you’ve been dying to take, or paid down debt; Digit is the money saving resource for you. Besides the fact that Digit is completely free to use; what I found most appealing about Digit was you can move your savings to other accounts (for investments or retirement) as often as you wish! Digit also automatically figures out when and how much is safe to save based on your lifestyle. It doesn’t require you to figure out an arbitrary amount to transfer every month. I’m sure you are thinking, is this app safe? The answer is yes, extremely safe. Digit takes state of the art security measures. When you enter your personal information, it is encrypted, anonymized and securely stored. If you still have some precautions, rest assure that the funds held within Digit are FDIC insured up to a balance of $250,000. Now do you feel better? Last thing you need to know before we get into the set-up process and fun facts, Digit is only available in the U.S for now. Good news for our foreign friends is that they are hoping to expand in the future!

Now let’s get down to the 10 facts and steps to start your savings:

1. PSA: You do not need a savings account to sign up with Digit.
2. Digit is completely free to download and sign up! You can find the apps in both the Apple Store and Google Play.
3. Connect to your checking account. Digit will analyze your income and spending and find small accounts of money it can set aside for you. The nice thing about Digit is they won’t store your blank log in!
4. At this time, Digit supports of 2,000 banks and credit unions.
5. Digit saves a little every week. Every 2 to 3 days Digit will transfer some money usually $5-$50 from your checking to your Digit savings account. The nice thing is they will never transfer more than you can afford.
6. Don’t be alarmed when you see “Hello Digit Inc.” on your bank statement, that’s just Digit moving funds from one account to another.
7. Don’t worry about over drafting your account with Digit. Their math skills and ability to identify money you can afford to save is so strong that if they do over draft your account they will cover the fee!
8. You can purchase your savings at ANYTIME! It’s as easy as sending a text messages to Digit and your money will be in your checking account by the next business day! There’s no minimums, no fees and they allow unlimited transfers.
9. Every 3 months you will receive “saving bonuses”. You’ll receive 5 cents for every $100.
10. Digit will send you text updates to let you know your current account balance and how much you have in savings.

The app is simple, just sign up and let Digit handle the rest!

Looking for ways to save even more? Check out these great articles

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I love the beginning of the new year. There’s just something about turning the calendar over that revitalizes me. To me, the new year symbolizes a fresh start. Even if the previous year was tough, there’s always hope that things will be better next year. Every December, I outline my goals for the next year in various areas of my life. One of the areas I focus on, and will especially be focusing on in the upcoming year, is my finances. Unfortunately, towards the end of 2016, I fell off track and had to drain my emergency fund as well as acquire new debt by purchasing a new (to me) car. So, where do I even begin with setting my financial goals for next year? Below are some tips on how you can prioritize your financial goals for the upcoming year.

Assess your situation.

Take an honest look at your finances over the past year. In what areas did you excel and in what areas did you come up short? In this step, I look strictly at the “big picture.”

Set a budget for the upcoming year.

This step is key, because without budgeting you can’t meet your goals. I look at my budget spreadsheets from the entire previous year and determine in what areas I overspent and under-spent. If I’ve overspent in a particular area continuously, I ask myself how I can reduce my expenses in that area, and if that is not possible, I adjust my budget to account for the increased expense. I also look at my calendar and make notes on events that will require a budget adjustment, such as buying birthday or holiday presents or traveling. Of course part of the key of budgeting is being flexible, but preparing in advance for adjustments (when possible) is incredibly helpful!

Look at the “baby steps.”

Although I don’t always agree with everything Dave Ramsey teaches, I think his baby steps are a great guideline on setting financial priorities.

Do you have a mini-emergency fund of $1,000-$2,500? If not, make it a goal to fund your mini-emergency fund this year. Having a mini-emergency fund was critical when I had car issues because it prevented me from charging car repairs on my credit card.

If you’ve already established your mini-emergency fund, then take a look at all debts you owe and make it a goal to pay off debt in the upcoming year. I personally use the debt snowball method, which is lining up your debts from the smallest amount to the largest amount and paying off the smallest amount first, regardless of interest rate. It’s very motivating as you pay off a debt!

Once you’ve paid off all debt (minus your mortgage), fully fund your emergency fund. At a minimum you should save 3-6 months of expenses in your emergency fund, but I personally prefer to save 9-12 months.

Then, begin planning for retirement. Determine when you would like to retire and the amount of money you will need to live comfortably in your retirement.

Determine how much money you can put toward your goal each month.

I budget using a zero-based budget, which means every dollar gets a purpose. So, at the beginning of the year, I determine an average amount per month that I can put towards my goal. If you’re in the emergency fund or debt payoff stages, you may want to put extra penny towards that goal, while if you’re funding retirement you may want to put 10%-15% of your paycheck towards it.