STEPHEN SMALENBERGER, EA & MICHELLE SMALENBERGER, CFP®
So many people are excited about getting started on investing and seeing growth from the money they’re saving. But one thing that is really important to remember is to have an emergency fund. Put money aside before you start investing. Everyone wants to buy that stock that’s going to make you money.
And when you do start investing you want to be thoughtful of the types of accounts you are saving into. Before we got married we were both saving into different types of account, so those became accounts that were used for different purposes. One of us was saving in a savings account and the other was saving in a 401(k) that could be used for retirement. The savings account became our emergency fund and the other continued growing for retirement.
With our first jobs we started saving even a small amount like $25 per paycheck. It started a habit of saving and setting money aside that isn’t used for today. Any amount isn’t too small to get started. It establishes a behavior of getting started.
Now fast forward to where you are in your life. Maybe you’re saving for retirement. We aren’t sure what changes will be made over the next few decades that will affect our set plans for when we aren’t working anymore. So for us saving into a variety of accounts, traditional retirement like a 401(k), a Roth account such as a Roth 401(k), and a taxable account like a trust or joint account. This provides us with the ability to take funds from whichever account makes the most sense with the tax circumstances at the time.
Then comes the question of choosing your investments. Be careful that people like to tell you about the good stock or big gain they made one time or another, but they aren’t as quick to tell you about the time they made a bad stock or investment choice. So be careful as you talk with others. Also a friend’s advice may pertain to them but not to you. So just be aware of who you are listening to.
To recap, start with building an emergency fund then start saving in your retirement accounts even if it’s small.
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We are financial advisors in Deer Park and Barrington, IL. A team with a passion for helping others design a path to financial success — whatever success means for you. Each of our unique insights fit together to create broad expertise, complete roadmaps, and creative solutions. We have seen the power of having a financial plan, and adjusting that plan to life. The result? Freedom from worrying about the future so you can enjoy today.