16 Things Financial Advisors Never Do With Their Money — and You Shouldn’t Either

Financial advisors to help clients manage their money. As financial experts, they can offer advice on everything from investing to smart spending habits — but it can also be helpful to know what money moves they would never make themselves.

GOBankingRates spoke with a few financial advisors to find out what they would never do with their money. Here’s what they had to say .

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Money mistakes the super wealthy never make - that you might be doing now.

Ignore It

“Ignoring your money doesn’t make problems go away, nor does it lead to wealth,” said Christopher D. Musick, CFP, CKA, founder and financial planner at Purpose Financial Planning.

To be intentional with his cash flow, he sets time aside to budget monthly.

“I plan for how much is coming in, and what’s going toward spending, saving, giving, taxes and debt,” he said.  “I also review my accounts regularly, including my investments.”

Use Consumer Debt

“I don’t take on debt to afford my lifestyle,” Musick said.

He said doing so isn’t sustainable.

“Car loans leave you in debt and paying interest on a depreciating asset,” he said. “Carrying credit card debt is even worse, as it often has higher interest rates and is typically used to fund immediate consumption, leaving you with nothing to show for that debt.”

He said consumer debt works against building wealth.

“It takes away from your net worth and constrains your future cash flow,” he said.

Learn More: I’m a Retired Boomer: Here Are 3 Debts You Should Definitely Pay Off Before Retirement

Invest My Emergency Fund

“I don’t want to worry about stock market volatility in the midst of an emergency,” Musick said. “My emergency fund is in a high-yield savings account (HYSA), but other options include things like CDs or money markets.”

He said he wants his emergency fund to be liquid, accessible and guaranteed to be there when he needs it.

Forget Taxes

“The last thing I want is to get surprised by a big tax bill in April,” Musick said.

Instead, he keeps a close watch on his earnings throughout the year to ensure he’s withholding enough taxes and determine if estimated taxes are necessary.

“I also look for tax-planning strategies that may help me lower what I owe in taxes now or in the future,” he said.

Keep It All for Myself

Giving back to others is important to Musick.

“Regardless of my income level over the years, generosity has been a key part of my financial life,” he said. “While I enjoy nice things and fun experiences like anyone else, I find that blessing others brings me the most happiness, contentment and sense of purpose with my money.”

Put All My Eggs in One Basket

Investing your money is smart, but it’s important to do it right.

“There is a difference between having a concentration in one asset and betting everything on that one asset,” said Sean Rawlings, founder and financial planner at WealthBound Advisors . “Diversifying keeps you from losing everything and having your net worth always move in the same direction, both up and down.”

Let My Cash Reserves Earn Nothing

“You’re leaving money on the table if you don’t take advantage of risk-free rates,” Rawlings said. “If your cash is sitting idle earning 0%-1% in this environment, you are just being inefficient.”

Shopping around can literally pay off.

“There are many institutions that will pay you 5%-plus on your cash right now, all while being completely liquid and not subject to market risk,” he said.

Not Have Any Cash Reserves

Every good financial advisor knows the importance of putting money aside for a rainy day.

“The first step in personal finance is building up your cash reserve or emergency fund,” Rawlings said. “This is what keep you from going into debt when life happens.”

Not Be Tax-Diversified

You might have an investment strategy, but financial advisors also have a tax strategy.

“Most people only think about diversifying their investments and never think to diversify their taxes,” Rawlings said. “You’ll either pay taxes now, in the future or never, utilizing different tax-advantaged accounts such as 401(k)s, Roth accounts and taxable accounts.”

Try To Time the Market

No one knows what the market will do now or in the future, Rawlings said.

“By trying to time the market, you miss out on some of the best days, which often times come during the most volatile times,” he said. “Market timing is a surefire way to underperform long term.”

Save All My Money in the Bank

Having money in the bank is important, but Rawlings said that alone won’t give you financial freedom.

“Inflation will eat up your money over time,” he said. “You have to invest your money and allow compound interest and time to do the heavy lifting.”

Overextend Myself Based on This Year’s Income

Oftentimes, after having a year of high earnings, people make a large purchase — but Rawlings said he wouldn’t do that.

“Then when a down year comes, they find themselves stretched too thin,” he said. “This often happens with real estate purchases and is where the term ‘house poor’ comes from.”

Spend Money for a Tax Deduction

“A tax deduction does not make a purchase free, it’s simply a discount at whatever your tax rate is,” Rawlings said. “So, spending $10,000 to save $3,000 in taxes still means you spend $7,000.”

Given that, he advised against spending money on things you don’t need just to get a tax deduction.

Spend Money on Things That Don’t Align With My Values

“Everyone’s values are different,” Rawlings said. “You should spend guilt-free on the things you value most, whether that is family time, vacations, etc.”

To have the funds to do that, he said you shouldn’t spend money on things you don’t value.

Buy Permanent Life Insurance

“These policies are extremely expensive and not at all necessary,” said Carla Adams, CFP, founder and financial advisor at Ametrine Wealth . “Term life insurance policies are far more affordable and can provide all of the necessary coverage needed in case of an untimely death.”

After reaching retirement age, she said life insurance is no longer necessary, as you should have already built up enough assets to support yourself and any dependents.

“The only possible exception would be if I happen to one day become so wealthy, that it would make sense for me as an estate-planning tactic to move assets out of my estate into an irrevocable life insurance trust (ILIT) for my heirs to use to pay my estate taxes,” she said.

Invest In Cryptocurrency

“Cryptocurrency is a highly speculative investment with no true underlying value,” Adams said.

On the other hand, when you buy stock, she said you’re purchasing a small part of an actual company that is producing goods and/or services, creating value and earning a profit.

“This is how stocks appreciate in value and sometimes also pay dividends,” she said. “Cryptocurrency is simply worth whatever the market deems it is worth at any given time.”

She said it is currently rarely even used as an actual currency.

This article originally appeared on GOBankingRates.com : 16 Things Financial Advisors Never Do With Their Money — and You Shouldn’t Either