This Friday the 13th, you might take some extra precautions to ward off bad luck, perhaps carrying around your rabbit's foot or other good luck charm. But even if you’re not superstitious, it’s worthwhile to consider how to safeguard your financial situation—not just today, but every day.
Use these four tips to ward off bad luck when it comes to your finances:
1. Find a Qualified Investment Professional
Don't let bad luck strike by working with an unregistered or unscrupulous investment professional. Be sure to use FINRA's BrokerCheck, a free tool to research the background and experience of registered financial professionals and firms before you work with them. Only registered individuals can sell registered securities products such as stocks, bonds and mutual funds.
You can find out, among other things, whether your investment professional is licensed in your state to conduct business or whether they’ve been sanctioned by securities regulators. If someone you’re working with has a complaint on file, read What To Do If Your Broker Has a Customer Complaint on BrokerCheck to learn more about that information.
Interview a selection of candidates. Ask lots of questions: Have they worked with people like you? Does their firm have minimum balance requirements? Verify their background, how they’re compensated and what fees and expenses they charge. Be clear and honest about your investment goals and the amount of risk you’re comfortable taking.
2. Create a Budget (and Stick to It)
If you’re struggling to manage your expenses, you might feel unlucky. But a thorough budget might be just the thing to help keep spending in check and turn your luck around.
Having a budget—call it a spending plan if you like—is fundamental to your financial health. Start by writing down your monthly income, then track your expenses and see where you can cut back if needed. Be realistic, leaving yourself a little wiggle room for when costs are higher than expected, and make paying off high-interest debt a priority.
It often helps to set financial goals for yourself: This can help keep you motivated when you’re tempted to stray from your spending limits.
3. Establish an Emergency Fund
One of the best precautions against bad financial luck is to create an emergency fund. That way, if your income drops or unforeseen expenses arise, you’re prepared to weather the storm.
According to the 2021 FINRA Foundation National Financial Capability Study, 43 percent of respondents don’t have an emergency fund. That lack of a financial cushion can make any stroke of bad luck even worse, especially if you have to go without vital services such as car repairs or health care or take on debt to pay the bills.
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, but even a small emergency fund is better than nothing. Start by setting up a regular, automatic contribution of an amount you can reliably afford, and add extra when you can.
4. Brush Up on the Red Flags of Fraud
Fraudsters are a big source of bad luck for many. They often tailor their pitches to match the psychological profiles of their targets 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 persuasion tactics, which can leave even the savviest person in a haze.
One of the best ways to avoid scammers is to learn their tactics. Remember, we're all at risk. Anyone can become the target of a fraudster, so it pays to learn how to spot suspicious sales pitches and scams.
Be on the lookout for common schemes like imposter scams, in which bad actors impersonate trustworthy figures, or pig butchering scams, which often start with a seemingly innocuous “wrong number” message. Don’t automatically trust that an investment or a seller is legitimate, and never send money to people who you’ve only “met” online.