Three Signs It’s Time to Seek Professional Financial Advice
Adulting is a full-time job. From making appointments and paying bills to buying a house for the first time, you have a lot on your plate. As a teenager and young professional, your parents may have helped you file your tax returns. But the time has come to face reality: Your parents are not your accountant.
While there are some definitive signs that it’s time to leave the nest, the signs that you should take control of your finances may be harder to identify, especially if you aren’t looking for them.
Below are three signs that you may want to seek your own professional accounting or financial advisory services:
Sign 1: You want to begin an investment strategy.
Now that you’re building a savings account and saving for retirement with a 401(k), saving for retirement with a 401(k), or have a 403(b), 457, or IRA account, you may be considering how you can invest your income so it continues to help you meet your short and long-term financial goals. Before you make any decisions about investment vehicles, stop and consider the tax consequences. You’re going to want to call a professional for this one.
While parents are a wealth of information, they may not have sufficient knowledge or recent experiences to steer you in the right direction. Instead, consult an accountant and an investment advisor, who can help make sure you’re on track to get the most out of your paycheck and meet your financial goals.
Sign 2: Your income is changing.
When you first entered the full-time working world, you most likely had nothing more than your W-2 and/or 1099 form. Because your needs were simple, it was easier for your parents to help you with your taxes. Now that you’ve gotten a raise with that promotion, your financial strategy is likely going to be more complex and may stretch beyond your parents’ or an app’s expertise level. A tax accountant can help identify opportunities for tax planning and savings strategies.
Sign 3: You’ve experienced a major life event like getting married or having kids.
Major life events often mean a change in finances. From joining accounts with a partner or spouse to saving for your children’s future education, you should be consulting a financial advisor regarding the best ways to manage your financial assets and meet your goals.
Should I use my parents’ accountant?
You might consider using the same accountant as your parents. One benefit of using a family accountant is that they already know the big picture of your family’s finances, from family history to how assets held by your parents or by your family trusts will affect your financial situation, which can be helpful for tax planning strategies.
One major disadvantage is that your parents will be the main point of contact. This can impact the development of your own personal relationship with your accountant, who can proactively identify tax savings strategies based on your own goals. While your accountant should maintain confidentiality and only discuss your information with you, it can be harder to separate your financial identity from your parents if you’re using the same person.
Can I just use online tax software?
We are in an age where everyone wants to do everything with an app or online instead of having a face-to-face conversation. But the digital route might not make the most sense for your finances. Talking with an actual person can be more helpful than online or software-based tax options. While these can help you file your return, they do not provide a human touch or dialogue.
Through conversations, your accountant may point out tax saving strategies you hadn’t previously considered. Software can help you on a basic level to complete the return, but it does not consider your financial goals or provide you with the more complex tax planning strategies that will be tailored to your needs.
Rita Yeung, vice president and manager of tax services at Rockland Trust in Hanover, thinks that everyone should consider the following when managing finances for the first time or using financial advisory services:
By maintaining a close relationship with your financial advisors, you can navigate changes and ensure you’re on track to reach those milestones most important to you. At Rockland Trust, we work with young professionals across Eastern Massachusetts and Rhode lsland. Stop by one of our branches to chat with our financial experts. In the long-term, you’ll be glad you did!
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