Financial wisdom you can take to the bank

Whether it’s in the kitchen, the doctor’s office or on the car lot, most people appreciate a few good pointers now and then, especially if they lead to good health or saving time or money. We’ve gathered a handful of our staff’s personal favorite money tips that can help you build a healthy financial life.

1. Be Patient

In analyzing investments and investment strategies, I always remind myself that successful investing of any kind should be considered a long-distance race, not a sprint. As Warren Buffett famously said and we’ve witnessed, “The stock market [or really, any other] is a place for transferring money from the impatient to the patient.”

A great website for getting a historical perspective on all sorts of economic and market statistics is http://www.multpl.com/sitemap.

2. Make a budget

Too many people I talk to about money say they don’t have a budget, or they “kinda” have a budget. This is bad. A budget is your map, your reality check. If you don’t have one you could be headed for trouble.

I think most of us know roughly how much we earn each month, but do you know how much money you spend, especially with any sort of detail? I bet if you tracked your spending for a month or two, you would be surprised to learn just where your money is going. You may be aware of your bigger expenses, but the smaller ones? They quickly add up and could be killing your ability to save or invest. A budget is probably one of the best things you can do for yourself. It is your road map to financial freedom.

Here is a good piece on budgeting by Dave Ramsey. https://www.daveramsey.com/budgeting/how-to-budget/

3. Always have an emergency fund

Do not invest in the stock market, take an expensive vacation, buy a new car, pay for someone else’s college, invest in real estate, or pass “Go” until you’ve first established a comfortable emergency fund.

Life happens — you’ll need that emergency fund at some point. In the unlikely event that you don’t end up needing that emergency fund, you still won’t regret having it. Just knowing that you have an emergency fund to fall back on allows for greater peace of mind in your day-to-day life.

While you’re at it, you might as well earn some interest on that savings. Many bank accounts don’t pay interest these days. Shop around and find a place that will pay you interest on your savings. Discover (https://www.discover.com/online-banking/savings-account/) is currently paying 0.95% on deposits, with no fees or restrictions. Sure, 0.95% isn’t much compared to interest rates that were available in past decades, but it’s a lot more than 0.00%. Don’t keep your emergency fund in an account that doesn’t pay interest.

4. Start early

If you want your money to really grow, start making monthly contributions to an investment account early in your career.

This will pack a much bigger punch than if you joined the game later on, all due to a nifty principal called compound interest. With compound interest, interest is paid on previously earned interest. (Oh happy day — free money!) The longer your interest is earning interest, the more your money multiplies. Here, time is your friend. And, it’s never too early to start. Even working teenagers should put their money into an account where it can grow. It doesn’t have to be a lot. Even small amounts of regular contributions will have eye-popping results, given enough time for compound interest to work its magic.

That being said, don’t be discouraged if you are well into life and haven’t started saving for the future. The best time to start is now. You may have to make bigger contributions to catch up, but the important thing is to get started.

American Funds offers good information on the benefits of early investing. https://americanfundsretirement.retire.americanfunds.com/planning/plans/benefits-of-starting-early.htm

5. Get a free credit report

Before you take out a loan for a major purchase (think house, car, boat, business, etc…) be sure you get a credit report — a free credit report.

Federal law requires all three major credit reporting agencies — Equifax, Experian and TransUnion, to give consumers a free credit report every 12 months, if requested. There are no gimmicks. It really is free! The only upsell is to also get your credit score, which costs money. Credit reports are useful to see if anything looks out of place, or fraudulent. You can potentially improve your loan terms by addressing any discrepancies before you begin the lending process. And it probably goes without saying that reviewing these reports is a MUST if you suspect your identity might be stolen!

https://www.annualcreditreport.com/index.action

6. Automate your savings

Commit to saving first and spending later. Set up automatic contributions to your retirement or savings accounts from your paycheck or bank account.

Believe me, if you never see the money in your bank account, you won’t miss it. And this way there’s no saying you ran out of money at the end of the month and can’t contribute after all. It’s already decided. A done deal. It’s like paying yourself first. And remember, if your contributions are going into investments, not only will you be saving, you’ll be earning money on that investment — a double bonus!

Sometimes it’s good to push ourselves. To begin a good habit. To do a little more, a little better — to try a little harder. And it may turn out to be not all that painful. Jeanette Pavini, household savings expert says, “If you already have automatic savings, up it by 1%. It’s small enough you won’t notice, but big enough to make a difference.”

Online calculators can show the difference between contributing monthly, semi-monthly or weekly. Slightly more is earned over the long run if you are contributing weekly rather than monthly. The difference is even more noticeable if you are contributing monthly versus annually (or “whenever you get around to it”). http://401kcalculator.net/

7. Stick to your list

We all need to eat. But seriously, how many times do we buy more than we need at the store? Grocery shopping is a necessity, but also potentially a budget killer, especially if you don’t stick to your list.

I don’t know how many times I’ve come home from a trip to the store with a gazillion extra items padding my bags — things not on my grocery list. I admit, sometimes I can’t resist the siren song of the beautifully displayed fresh fruit and vegetables. They look so good! I just have to add them to my cart. And then sadly, a week or two later, I discover them in the back of the fridge, limp, moldy and uneaten.

So, what should be on your list? Only what is in season and what you know you’ll eat. Stocking up on essentials that are on sale is also smart. Most of the big chain grocery stores have their club cards and often you can get better deals on some of your basics there than at the big warehouse stores. (Bigger isn’t always cheaper!)

You can find some good tips for frugal living here: https://www.thebalance.com/grocery-savings-4073550

In the end, luck and wishful thinking probably won’t get you where you want to be. (Do they ever?) On the other hand, planning and pushing yourself a bit just might. Simply adding a few good habits will go a long way toward creating the kind of financial future you want.

Advisory services are offered by Joslin Capital Advisors, LLC, an SEC Registered Investment Advisor.