12 Reasons You Should Manage Your Own Money

There are lots of professionals out there who will manage your money for you.

But before you decide to turn over control of your financial future to someone else, it's important to consider whether you'd be better off taking a more hands-on approach.

In fact, there are 12 major benefits of managing your money yourself, which you simply won't get if you hand over the reins to an outsider.

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Anytime you outsource any aspect of your money management, you're going to be charged for it. And any fees you pay will reduce the return you earn on your investments and can leave you with less money in the end.

If you manage your money yourself, you won't have to pay for professional advice and you can choose low-fee or no-fee investment options that allow you to keep more of your gains.

No one else can understand what you hope to achieve with your money as well as you do.

While financial professionals will work with you to set goals that guide their efforts on your behalf, they still won't have the full, comprehensive understanding of what your objectives mean within the context of your life.

With the intimate knowledge that comes from working toward establishing goals you personally set for yourself, you stand a far better chance of achieving what matters most.

No outsider is ever going to care about protecting your money and growing your wealth with the same level of passion that you do.

The decisions that are made about your money will have a direct and profound impact on your life and security. That's not true of an outsider making choices on your behalf.

For the person managing your money for you, you're just one of many numbers on a page and their personal stake in your particular success is minimal.

Some financial professionals are held to a fiduciary standard, which means they are required to put your interests first. But that's not the case in all situations.

Further, even when advisors are mandated by law to make decisions in your best interest rather than their own, there's still a possibility they may be swayed by their own financial incentives-- even if that happens subconsciously.

If you're managing your own money, you never have to worry about being taken advantage of by an advisor or money manager -- even inadvertently -- since you're in full control of what happens to your funds.

ALSO READ: The Fiduciary Rule: Pros and Cons

Professionals are subject to rules and constraints that don't apply to you when you manage your own money. In part because of these limitations, they may not always do a better job than you would.

One good example of this comes in the form of actively managed funds, which tend to underperform simple low-cost index funds over the long run.

A shocking 71% of large-cap actively managed equity funds in the U.S. ended up underperforming the S&P 500 in 2019. And this is far from the only example of professional investors failing to beat their benchmarks.

ALSO READ: What You Need to Know About Active vs. Passive Investing

When you manage your money yourself, you have total control over what to do with it. You can work with any broker or financial institution that you want and buy any assets you like.

Often, outsourcing your money management narrows your options, which means you could miss out on certain opportunities.

Of course, you'll still want to steer clear of disreputable financial companies or overly speculative investments. But you're the one who gets to make those decisions.

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When you hand over the task of managing your money to an outsider, it can become difficult to make any decisions yourself even if you're fairly confident they're the right ones.

Pressure from the "professionals" could prompt you to make money moves even if you don't feel they are 100% right for you, or it could deter you from taking actions you believe would be best if the professionals disagree.

Of course, when you don't rely on outside advice, it's important that you take the time to educate yourself on the decisions you're making so you can trust in your own expertise.

If you want to be effective at managing your money, you'll take the time to learn how to set solid financial goals and how to invest wisely.

The learning involved in this process can be invaluable. You can develop the knowledge to formulate an investment strategy, allocate your assets, and manage your risk tolerance.

This knowledge will be invaluable throughout your life, as you make both short-term and long-term choices about how to handle your financial affairs.

ALSO READ: How to Invest in Stocks: A Beginner's Guide for Getting Started

If you outsource your money management, it's easy to lose sight of how you're doing financially or what progress you're making toward your goals. In fact, you may not think very much about your money at all.

But when you handle your financial tasks yourself, you're interacting with your money and investments regularly.

You'll have a much clearer picture of how you're doing and whether you're on track to achieve the goals you've set for yourself.

When you're in total control of your wealth-building efforts and are taking the time to research investments yourself, you're a lot more likely to get excited about the process.

This could inspire you to make more responsible decisions with your money, especially if you see that the investments you're choosing are performing well and you want to devote more funds to them.

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If you want to make sure that none of your money goes into the pockets of companies that you disapprove of, managing your money yourself can be the best way to do that.

You can more easily ensure your money supports only businesses that you believe do good if you have control over where your funds are invested.

Finally, you may want to manage your money yourself because you enjoy it.

It can be fun to research investments and other financial products, learn about financial strategies, and see your wealth grow.

If you enjoy taking control over your financial life, there's no reason to pay someone else to do it for you.

Managing your own money isn't the right strategy for everyone. While there are some big advantages to it, it may not be the right choice if you aren't good with money or aren't interested in taking a hands-on approach to investing.

But if you have the right temperament, are willing to devote the time, and know you can do so responsibly, chances are good you'll be happy you made the choice to maintain control over your own financial life and future.

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