This Friday the 13th, you might be taking some extra precautions to ward off bad luck, perhaps carrying around your rabbit's foot or other good luck charm. But how about taking some extra precautions when it comes to your financial situation?
Don't let bad luck strike
from working with an unregistered
or unscrupulous investment
professional. Before you hire a
broker, be sure to check FINRA's
Here are four ways to ward off bad luck when it comes to your finances not just today, but every day.
Don't let bad luck strike from working with an unregistered or unscrupulous investment professional. Before you hire a broker, be sure to check FINRA's BrokerCheck, a free tool to research the background and experience of financial brokers, advisers and firms. This is important because only registered individuals can sell registered securities products such as stocks, bonds and mutual funds.
You can find out, among other things, whether your broker is licensed in your state to conduct business or whether he or she has been sanctioned by securities regulators. If he or she has a complaint on file, be sure to read Your Broker Has a Customer Complaint, Now What? for more information on how to look at that information.
Interview a selection of candidates. Ask lots of questions: have they worked with people like you; verify their background; how are they compensated and what fees and expenses they charge. Be clear and honest about your investment goals and the amount of risk you are comfortable taking. Learn about any investment before you make it.
And remember: it's not enough to read the sales material or offering documents. Make sure you truly understand the investment or strategy by asking lots of questions about potential risks and rewards—and how the investment will help you achieve your goals.
Create a Budget (and Stick to It)
If you are burdened with credit card debt you may feel unlucky, but in reality you might just need a budget to keep spending in check.
Having a budget—call it a spending plan if you like—is fundamental to your financial health. Those with a budget are more likely to spend less than their income, and considerably more likely to have set aside emergency funds, according to the FINRA Financial Education Foundation's Financial Capability Survey (NFCS). And budgeters who focus on setting long-term financial goals are more likely to have no difficulty making ends meet and to be satisfied with their finances
Need help getting started? Here are seven tips for creating—and sticking to—a spending plan
Establish a Rainy Day Fund
Speaking of which, one of the best precautions against back luck is to create a rainy day or emergency fund. That way, if bad luck strikes you are prepared and can weather the storm.
About 34 percent of respondents to the FINRA Foundation's NFCS said they probably or certainly could not come up with $2,000 in an emergency. That inability to pay can make any stroke of bad luck even worse, especially if you have to take on debt to pay the bills, or go without vital services such as car repairs or health care.
Make sure that doesn't happen to you by building your emergency fund. Ideally, you want it to eventually equal about three to six months' worth of living expenses. If you've been procrastinating on establishing your emergency savings, read this to get started.
Brush Up on the Red Flags of Fraud
Fraudsters and scammers are a big source of bad luck for many. They're masters of persuasion, tailoring their pitches to match the psychological profiles of their targets. They look for your Achilles' heel by asking seemingly benign questions—about your health, family, political views, hobbies or prior employers. Once they know which buttons to push, they'll bombard you with a flurry of influence tactics, which can leave even the savviest person in a haze.
One of the best ways to avoid them is to learn their tactics. Read up on some of the red flags here.
And remember, we're all at risk. Anyone with money is likely to become the target of a fraudster at some point, so it pays to learn how to recognize how they operate and how to spot suspicious sales pitches and scams.
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