Economic uncertainty is an ever-present part of the current global landscape. Because of this, financial advisors believe it is important to make decisions that will pay off in the future.
Starting a savings plan may seem like a daunting task, they say, but Americans should be looking into short and long-term investment strategies.
For many, having enough extra income to fulfill either of those options seems incredulous, but with a few simple strategies, it is possible to start building some financial security.
“We all waste enough money to fund a retirement account,” said financial advisor Tim Heuiser, with Southern Wealth Management. “I tell our buyers to fund an IRA (individual retirement account) or if they’re in a company that offers 401(k), to put money into that at the very least.”
Heuiser continued by saying, “It is better at younger ages to do without something you want so that you don’t end up in retirement having to do without something you need.”
Retired financial adviser Sharon Kissinger agreed.
“It is never too late to start a savings plan,” she said. “I believe 10% to God, and if you can save 10 or 15% out of your paycheck and put that in savings, that’s an excellent way to get started.”
Financial discipline is necessary to establish a regular savings plan and commit to it, advisors said.
Their advice — it is a good idea to track your expenses and make a conscious decision to avoid impulse purchases. Look for ways to reduce personal spending, such as giving up that morning coffee from the local barista, limiting unnecessary driving, buying off-brand items when possible, packing your own lunch and overall cutting down on non-essential spending.
One convenient way to save is to set up automatic transfers from your checking account to a savings account on a regular schedule.
Heuiser said his best advice is to pay yourself first.
The Roth IRA is a good method of saving for retirement for long term, according to both Kissinger and Heuiser. Kissinger noted that a lot of jobs are now offering either a 401(k), or a simple IRA that will allow employees to have money directed out of their paycheck into a retirement account.
“I always recommend that you at least do the amount the company will match,” she said. “On a lot of plans, if you put in 3% of your pay, then your employer will match that, so that’s a 100% return on your money right out of the chute.”
Heuiser suggests putting something back every payday if possible.
“I try to tell everyone we counsel to first build up a nest egg of three to six months worth of living expenses in a savings account so they have money available in case of an emergency, and then put as much as they can possibly afford into a retirement account,” he said.
Kissinger stated she has worked in the investment industry for over 42 years.
“I’ve heard this my whole career, the markets are scary right now or the economy’s really bad, I better wait and not start my savings or investing plan till things get better. That is the wrong answer,” she said.
The time to save and invest is right now, according to Kissinger, who advises, “wherever you are in your life, it’s right now. Don’t worry about is the market going down, is the market going up or are interest rates going up or down.”
Kissinger said it is never too late, but the earlier one starts preparing for their future financial security the better. She encourages parents to work with their children when they get that first job so they are guided in a responsible direction.
There are options available this week to help teens become introduced to financial literacy. Sterling Bank will hold a teen financial literacy class in the main branch of the Poplar Bluff Municipal Library from 1-2 p.m. for the last three Thursdays in January. It will present the basics of saving and budgeting, according to the library.
“If you systematically invest money over time,” Kissinger said, “that will be the very wisest thing you can do. Waiting is not a good idea. Today’s the day to start.”