Your Money Journey: Part 1
You may be asking yourself, “Now that I have money, what should I be doing?”. We have created Your Money Journey to answer this and help track your financial progress throughout life. In this article, we will discuss progressing to Mile 3. This grouping captures the beginning of your journey before diving into maximizing your investments.
Trailhead – Base Reserves
At the beginning of Your Money Journey, you will focus on building your base reserves. This can be viewed as an “initial” emergency fund. The focus is to save enough money to cover your medical deductibles or have a minimum of $1,000. This fund can help cover your healthcare risks and smaller, unexpected expenses. Keep in mind, you should avoid using a credit card to cover these emergencies.
Mile 1 – Utilizing Employer Match
While there is no such thing as a “free lunch,” this is as close as it gets. Many companies offer a match up to a certain percentage in employer-sponsored retirement accounts. Maximizing your contributions to attain the full match is a great starting point when it comes to saving for retirement. Failing to take advantage of this perk means leaving “free money” on the table.
Mile 2 – Fully Funded Emergency Account
This milestone is a continuation from the trailhead mentioned above. The best practice is to have 3-6 months of non-discretionary expenses in cash reserves. Examples of these expenses are mortgage/rent, loan payments, taxes, utilities and food. If you’re in a dual income household, three months of expenses saved may be sufficient. If you only have one income source, six months may be better. The primary use for your emergency fund is to cover job loss, car repair, home fixes and other similar expenses. If you are interested in learning more about emergency funds, click here.
Mile 3 – Pay Off High-Interest Debt
“High” interest is debatable, but we define any rate above the prevailing mortgage rate as “high”. You will typically see credit cards and consumer or student loans have “high” rates. Remember, debt (typically) does not go away. Paying the minimum can cause these types of debt to spiral out of control. If you are interested in learning more about debt management, click here.
__________________________________________________________________
Completing these milestones creates a powerful foundation for your financial plan. Choosing to ignore them can lead to unwanted consequences and ultimately lower your chances for a successful future.
About Strategic
Founded in 1979, Strategic is a leading investment and wealth management firm managing and advising on total client assets of over $2 billion.
Disclosures
Strategic Financial Services, Inc. is registered with the Securities and Exchange Commission (SEC) as an Investment Advisor. The term “registered” signifies compliance with regulatory requirements and does not imply a certain level of skill or training.
The information provided on our website, including weekly market commentaries, financial planning articles, and other educational resources, is intended solely for educational purposes. It is designed to offer insights into financial planning and investment management, aiming to enhance understanding of financial concepts, strategies, and market trends. This content should not be interpreted as personalized investment advice or a recommendation for any specific strategy, financial planning approach, or investment product. Financial decisions are deeply personal and should be made considering the individual’s specific circumstances, goals, and risk tolerance. We recommend consulting with a professional financial advisor for personalized advice.
Please be aware that Strategic Financial Services, Inc. does not provide legal or tax advice. The content on this website is not intended to be used as such or as a substitute for legal or tax advice from a licensed professional. We advise seeking guidance from qualified legal and tax advisors regarding these matters.
Investment Risks and Portfolio Management.
The discussion of any investments on this website is for illustrative purposes only and provides no guarantee that the advisor will make any investments with the same or similar characteristics as those presented. The investments identified and described herein do not represent all the investments purchased or sold for client accounts. The selection of representative investments to discuss is based on various factors, including recent company news or earnings releases.
It should not be assumed that any investments discussed were or will be profitable. All investments involve risk, including the potential loss of principal. There is no assurance that investments mentioned will remain in client accounts at the time you view this information.
When index returns are mentioned on this site, they are provided as a general indicator of market conditions and are not representative of any client’s portfolio performance. Indices are unmanaged, do not incur management fees, costs, and expenses, and cannot be invested in directly. Therefore, their performance does not reflect the expenses associated with the management of an actual portfolio.
While index returns are used as a framework to report on general market conditions, they should not be construed as an indicator of future performance of any specific investment or portfolio. Discussion of index returns is intended to provide context and insight, not to suggest that clients will achieve similar results. Each client’s portfolio is managed according to their specific investment goals and financial situation.
The opinions and any forward-looking statements expressed in the articles and videos featured in our resource center are as of the date of publication. These statements are based on current laws, regulations, market conditions, and other relevant factors, including third-party data. Given the dynamic nature of financial and regulatory environments, as well as potential changes in market conditions or economic circumstances, the information provided may become outdated or may no longer be accurate.
We rely on third-party data to form our opinions and projections, which means that these are subject to the same uncertainties that affect all data-dependent analyses. As such, we advise readers to exercise caution and not rely solely on the statements made herein for making financial decisions. It is recommended that investors consult with a professional advisor who can help assess the relevance and accuracy of the content in light of the current economic climate and personal financial situation.
Our website contains links to third-party websites as a convenience to our users. Strategic Financial Services, Inc. does not control, endorse, or guarantee the content found on such sites. We are not responsible for the accuracy, legality, or content of the external site or for that of subsequent links.
Contact the external site for answers to questions regarding its content.
The inclusion of any link does not imply our endorsement of the site, nor does it imply any association with its operators. Use of any such linked website is at the user’s own risk.