Success Starts at the Foundation

In today’s dynamic and challenging financial environment, many savers and investors are concerned about their ability to properly save and utilize their hard-earned money. Successful savers understand the value of revisiting key foundational strategies that are vital for helping achieve financial stability and long-term wealth. Maintaining a successful financial lifestyle can incorporate proficiency in several key areas, including having an overall grasp of your finances, understanding the basics of your income and expenditures, using credit and debt sense, and knowing how to save and invest your hard-earned dollars. 

We believe an educated client is our best client. We know that your financial journey can be enhanced with proper knowledge, strategic planning, and a commitment to setting and following long-term goals. 

Volatility and uncertainty will aways be a part of an investor’s journey. Seasoned investors always make time to recap and remember smart money management techniques. While there are many strategies that could help you reach your financial goals, we feel that every investor, regardless of their age, work status, or income, will benefit from reviewing the following fundamentals. 

Investing is a long-term commitment.

First and foremost, we believe investing is a long-term commitment. Most people invest in equity markets to build wealth in either their retirement or personal portfolios. Regardless of your goals,  investing in equities should always be thought of as a long-term commitment.

Historically, equities have rewarded long term investors.  Seasoned investors understand the difference between “investing” and “trading”. Investing is more of a long-term activity, while trading is a more short-term, higher risk activity. 

Having a long-term mindset helps experienced investors handle the stress of unpredictable market ups and downs. During high volatility and uncertainty, investors who have a long-term mindset typically experience less stress and anxiety than investors with a short-term approach to their investments. Seasoned investors know how to limit their exposure to the media and stay focused on their plan and personal financial goals. 

As iconic long-term investor Warren Buffet said, “Nobody buys a farm based on whether they think it is going to rain the next year. They buy it because they think it is a good investment over 10 or 20 years.” 

As financial professionals, our goal is to find the right long-term plan and investments for our clients’ portfolios, taking into consideration time horizons and risk tolerances. 

Understanding the importance of a budget.

A sound budget that is adhered to can take the guesswork out of your incoming and outgoing cash flow. It can help you plan for future purchases, determine what you need to put aside to reach savings goals, and understand what money you need to allocate toward daily living expenses. 

Do you have a vacation or event you need to plan for in the next 12 months? Having a personal budget will help you determine how much and at what frequency you’ll need to put funds aside for that trip or event. Seeing these figures in a tangible way can help make the decision whether you need to buy a “nice, but not necessary” item you are considering easier.  In creating your budget, you may discover many adverse spending habits that you didn’t even know you had. 

Many people are first introduced to the concept of saving at an early age when they were given their first dollar of allowance. Creating and following a spending plan that accounts for current and future income and expenses seems easy, right?  While the concept may seem simple, this is the one area that most people find themselves going off track, let alone forgetting altogether. Thomas Jefferson once noted, “Never spend your money before you have earned it”. Back then, he probably never imagined how easy it would be to spend money with the swipe of a card or click of a button that we are tempted with today. 

How many hopeful savers have devised a budget at the beginning of the year only to see it fall by the wayside before the first quarter even ended? According to a recent finding by WalletHub, over 86% of Americans have a budget. However, according to NerdWallet, a report highlights that 83% of Americans, even those who have created a budget, admit to overspending. To make the spending snowball even larger, many use credit cards to cover the overspending, thus incurring interest charges. 

The easiest part can be to create a budget; the hardest part is sticking to it. Staying passionate about your financial goals and keeping them consistently at the forefront of your mind can help you stick to your plan when tempted to unnecessarily spend. 

Use personal debt wisely

Now more than ever, it’s very easy to spend “imaginary” money. What used to take time with writing a check at the counter, can now simply be done by swiping a debit card or digital wallet in a second. What wasn’t available to us if we didn’t have cash is now at our fingertips with credit cards and digital pay options. But not without a cost – it can take only a few seconds to rack up thousands of dollars of unnecessary debt and interest charges. 

While some debt can be necessary and even provide some beneficial tax advantages, like a mortgage (of course, with a reasonable mortgage interest rate), incurring other types of personal debt or taking loans with higher interest rates can be one of the quickest ways to slow down or even stop any forward progress toward your financial goals. Avoiding any non-essential long-term debt is critical for preventing financial headaches that immediate gratification of even the best purchase cannot solve.  

Maintain an emergency fund

According to NerdWallet’s 2023 consumer budgeting report, emergency savings and investments are on the top of Americans’ financial priorities. An emergency fund can help buffer life’s unexpected turns. These funds should be dedicated to assisting you in the event of unplanned necessary expenses or financial emergencies. For example, the loss of a job, unexpected home repairs, or emergency medical bills. You may be tempted, but remember, these funds are not to be used for travel excursions or for impulsive purchases. 

I’m sure most of us have heard the saying, “pay yourself first”. This doesn’t mean buying that new featured item that your social media algorithm has incessantly advertised. It means setting aside an allotted percentage of your paycheck each month into savings or an emergency fund. Many savers also take the opportunity to advance their efforts by setting aside a portion or all of their tax refunds into these accounts. 

While income, necessary monthly expenditures, dependents, and lifestyles can differ, a good strategy for every saver is to aim for having at least three to six months’ worth of expenses saved in case of an emergency. 

Avoid liquidating equities to pay for larger expenses

Do you anticipate a big purchase, such as buying a car in the near future? Are you hoping to pay cash for this car? Do you have a trip or vacation planned?  Are you doing some remodeling in your home? 

Planning to have appropriate cash reserves for these larger expenditures is more strategic than keeping your fingers crossed hoping that your investments will rise and be the best source of funds the day you need them. Liquidating your investments at the wrong time can prove to be costly.  Successful investors try to be intentional when it comes to funding large expenditures. 

Live within your means

The best savers typically live within their means. In tune with keeping a budget and not going into unnecessary debt, living within your means is easier said than done. 

A good exercise is to write down your must-have expenses, such as housing, food, gas, medications, and utilities. Don’t forget to add a line for your savings and emergency fund.  Then write down your non-negotiable “want but don’t necessarily need” items, such as streaming subscriptions. Ideally, the total cost of your necessary items should leave you some savings and breathing room. If you’re finding yourself putting more and more on your credit cards and are unable to pay them off every month, you’re not living within your means. Successful savers and investors monitor their spending habits and think about the future.  

Enjoy your life!

After all this discussion about diligently saving, it may seem impossible to actually enjoy the money you have in the present day. Benjamin Franklin coined the famous phrase, “A penny saved is a penny earned.” But don’t forget that your hard-earned money should be enjoyed as well. Being diligent is important, but after you have accumulated a reasonable amount of savings, try not to eliminate all personal enjoyment just so you can squirrel away a few extra dollars. For some, this means taking that bucket list vacation or cultivating and enjoying their favorite hobby. For others, this could mean spoiling their grandchildren, or philanthropic work. Remember, money allows you freedom, choices, and opportunities to enjoy your life. 

Keep your complete financial future in view

Don’t lose track of your financial goals. The most critical step is to have a strategy and plan. The next step is sticking to it. As the steward of your wealth, we are here to help you on your financial journey. If you’d like to have a review of your overall financial picture, we can discuss this at your next meeting, or you can call us to set up an appointment. We understand that each client has a unique financial situation, and we will consider your distinctive needs and goals when providing any recommendations. 

Our objective is to understand the goals of our clients and then create plans to address those goals and needs.  As always, we appreciate the opportunity to assist you and your financial matters. If you have any questions or concerns, please call us. 

Disclosure:

Advisory Services offered through Materetsky Financial Group Inc., a Registered Investment Advisor. Securities offered by Registered Representatives through Private Client Services, Member FINRA/SIPC. Private Client Services and Materetsky Financial Group Inc. are unaffiliated entities. All insurance products are offered through unaffiliated insurance companies. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Materetsky Financial Group, Inc. [“Materetsky]), or any non-investment related content, made reference to directly or indirectly in this commentary will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this commentary serves as the receipt of, or as a substitute for, personalized investment advice from Materetsky. Materetsky is neither a law firm, nor a certified public accounting firm, and no portion of the commentary content should be construed as legal or accounting advice. A copy of the Materetsky’s current written disclosure Brochure discussing our advisory services and fees continues to remain available upon request or at www.materetsky.com. Please Remember: If you are a Materetsky client, please contact Materetsky, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. Please Also Remember to advise us if you have not been receiving account statements (at least quarterly) from the account custodian. Note: The views stated in this letter are not necessarily the opinion of broker/dealer, and should not be construed, directly or indirectly, as an offer to buy or sell any securities mentioned herein. Investors should be aware that there are risks inherent in all investments, such as fluctuations in investment principal. With any investment vehicle, past performance is not a guarantee of future results. Material discussed herewith is meant for general illustration and/or informational purposes only, please note that individual situations can vary. Therefore, the information should be relied upon when coordinated with individual professional advice. This material contains forward looking statements and projections. There are no guarantees that these results will be achieved. All indices referenced are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. The S&P 500 is an unmanaged index of 500 widely held stocks that is general considered representative of the U.S. Stock market. The modern design of the S&P 500 stock index was first launched in 1957. Performance prior to 1957 incorporates the performance of the predecessor index, the S&P 90. Dow Jones Industrial Average (DJIA), commonly known as “The Dow” is an index representing 30 stocks of companies maintained and reviewed by the editors of the Wall Street Journal. Past performance is no guarantee of future results. CDs are FDIC Insured and offer a fixed rate of return if held to maturity. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed.There is an inverse relationship between interest rate movements and bond prices. Generally, when interest rates rise, bond prices fall and when interest rates fall, bond prices generally rise. There is no guarantee that a diversified portfolio will enhance overall returns out outperform a non-diversified portfolio. Diversification does not protect against market risk. There is an inverse relationship between interest rate movements and bond prices. Generally, when interest rates rise, bond prices fall and when interest rates fall, bond prices generally rise. There is no guarantee that a diversified portfolio will enhance overall returns out outperform a non-diversified portfolio. Diversification does not protect against market risk.