FINANCIAL ADVICE FOR ANY STAGE OF LIFE Smith Wealth Advisor y Group is Here to Help with Your Wealth and Living a Fuller Life It’s never too late to get your finances in order, and the team at Smith Wealth Advisory Group has some advice to get you started and keep you on track. Regardless of your life stage, the following pages offer a few tips to consider.
Building a Foundation. Arguably the most crucial stage, developing good habits and avoiding bad ones is critical to a sound financial future.
Start an emergency fund. An emergency reserve of 3-6
Be sure to capitalize upon any “free money” available
months of living expenses is generally recommended to prepare
through such employer matching contributions.
for unforeseen events (i.e. home or car repair, medical expense,
Additionally, establishing a Roth IRA may be wise early
loss of income, etc.) which can be costly and unpredictable.
in one’s career. After-tax monies are contributed to the
Earmarking several months of living expenses into a savings
Roth account initially, with all future investment growth
reserve can provide protection from these situations by giving
and subsequent withdrawals tax-free assuming the
you access to monies that are readily available on short notice.
account has been opened at least 5 years and the owner is age 59 ½ or older. The IRS limits who can
Pay yourself first. The first monthly bill to be paid should be to
contribute based upon income and also limits the dollar
yourself for the betterment of your financial future. It’s common
amount that can be contributed each year ($6,000 in
for investors to get this backwards and attempt to save whatever
2021, plus an additional $1,000 if age 50+). Thus, it’s
monies may remain at the end of each month after expenses are
important to consider a Roth earlier in one’s career
paid. Inevitably, little typically remains after all the bills are paid
while income is lower and generally still within
so nothing gets saved. Start by routinely putting away at least
applicable limits.
10% of your income regardless of the specific dollar amount. With time and compounding, it’s amazing what even small
Focus on debt reduction. Many investors focus
ongoing investment contributions can do over time.
primarily on increasing assets but lose sight of the other side of the balance sheet - debt. It’s important to
Capitalize on tax-advantaged retirement accounts.
recognize how high-interest credit card, auto loan, and
Many employers offer retirement plans (401k, 403b, 457b,
student loan debt can hinder one’s ability to save and
SIMPLE IRA, etc.) that enable employees to contribute a portion
erode their net worth over time. Paying off high-interest
of their pay in a tax advantaged manner. Many employers will
debt not only eliminates unnecessary interest costs, but
also match employee contributions up to a certain percentage.
also enhances cash flow flexibility.
10 • YoCo CONNECT | FALL 2021 • Financial Advice for Any Stage of Life
