Parents often are encouraged to teach their children how to handle money and to begin those lessons at an early age.
One problem with that, though, is many adults aren’t all that financially literate themselves.
For example, one survey revealed that about 80 percent of Americans admit to making some sort of financial mistake, such as not saving enough for retirement, failing to track their spending or taking on too much debt.
“People can make financial mistakes for a lot of reasons,” says Brett King, the managing/founding partner and Senior Vice President Investments for Elite Financial Associates (www.elitefinancialassociates.com).
“But often it’s because they simply haven’t taken the time to make a personal budget and plot out their spending and investing habits.”
King says there are several steps to consider for people who want to make sure they are getting the most out of their money:
- Build a reserve account for emergencies. Major medical problems, job loss or other unexpected events can undermine anyone’s financial stability. That’s why it’s important to build an emergency fund. Many experts recommend the fund be large enough to cover all your expenses for three to six months, though that’s a tough goal for most people. But something is better than nothing, King says, so try to stash away at least a little each week.
- It’s never too early to start saving for retirement. “A lot of people tell themselves they will begin to save for retirement when their income reaches a more comfortable level,” King says. “But the longer you delay, the harder it’s going to be to accumulate the amount of money you will need when you retire.” If saving is difficult right now, one strategy would be to start small and increase your contribution each year as your salary grows. Even setting aside a small amount out of each paycheck now can make a big difference over time because of the power of compound interest.
- Adjust your strategies as financial circumstances change. Reviewing your income and expenses shouldn’t be a one-time event. For example, if you become a new parent you may want to shift some of your money into a college-savings plan for your child. Be ready to change to deal with the new realities life tosses your way.
“If you have concerns about whether you’re making the right decisions about your money,” King says, “you should seek the assistance of a financial professional who can give you guidance in getting your financial house in order.”
About Brett King
Brett King is the managing/founding partner and Senior Vice President Investments for Elite Financial Associates (www.elitefinancialassociates.com). Brett is a registered representative of IFS Securities. His career in financial services spans more than three decades. He holds a Series 7 stockbroker license, a Series 22 for limited partnerships and a Series 24 Securities Principle license. He also holds insurance and annuity licenses in multiple states.