How a Financial Analyst Can Help You Prevent and Address Debt?


Prevent and Address Debt

Amid rising inflation and the cost of living, Americans are confronted with a variety of financial challenges, and one of these is debt. Debt has become normalized to the extent that the average debt as reported by CNBC amounts to $90,460. This figure spans various consumer debt products like credit cards, personal loans, student loans, auto loans, and mortgages. While debt can be a valuable financial tool for essential purchases, debt levels typically increase as one reaches middle age. Some even carry a substantial amount of debt until retirement age.

How a Financial Analyst Can Help You Prevent and Address Debt?

If you want to improve your current and future economic situation, then it might be the right time to consider enlisting the professional help of a financial analyst for debt management.

  • Where financial analysts’ expertise lies

Getting a handle on your debt requires meticulous planning and strategizing, which is where the expertise of financial analysts lie. Financial analysts have a range of skills that include technical skills in accounting, financial models, and investment strategies; and soft skills for critical thinking, problem-solving, and interpersonal communication.

This hybrid skill set allows them to assist clients in every stage of their financial decision-making process, from relaying information on market trends and financial products to recommending strategies that align with the client’s desired goals and outcomes. With over 387,954 financial analysts currently working independently or under large institutions like banks and accounting firms, you can expect to find one who understands your unique financial status and can help you develop a strategic plan for addressing your debt.

  • Why working with a financial analyst is beneficial

The National Financial Educators Council reports that the lack of personal financial knowledge costs an individual an estimated average of $1,389.06 per year across all age groups. When you work with financial analysts who specialize in debt management and investment strategies, you can at once avoid this significant financial loss and even make your way towards building your wealth. Here’s how:

  • Evaluating your personal financial statement

While approximately 78% of adults surveyed by the Federal Reserves report that they are doing okay financially, it takes the help of a financial analyst to understand your current financial standing comprehensively. Your personal financial statement provides clarity on your net worth and cash flow by breaking down your assets and liabilities; it can also include important documents like balance sheets, tax reports, and checking and savings accounts. As the client, it’s your responsibility to ensure your documents are updated in real-time so that the assessment accurately reflects your financial health.

  • Planning for and sticking to your budget

As the pandemic eases, financial concerns have become less pressing than two years ago. Yet poll results from the Pew Research Center reveal that three in ten Americans still struggle with balancing their debt with their expenses for basic needs such as food, rent, and healthcare. As such, a well-planned budget must be created and adhered to with the help of a financial analyst who has a good grasp of your income and specific financial needs. When a financial analyst suggests trimming off your expenses and only sticking to essential categories, remember not to take it as a personal offense. They are here to help you recalibrate your priorities and thus develop healthier spending habits.

  • Developing your debt repayment strategy

Your financial analyst will help you develop a debt repayment strategy by identifying which debts are the most expensive and delinquent and which are modest and have relatively low-interest rates. For example, if you plan to pay off your mortgage early, they can provide you with a cost-benefit analysis so you don’t negatively affect your credit score. Nearly 24% of adults may delay retirement due to ongoing debt and employment challenges, but fortunately, some financial analysts offer tailored strategies across every life stage. They may even help you restructure your debt repayment plan if you are currently in between jobs or want to save up for retirement.

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