Broker Check

What you’re not learning in school can hurt you.

| July 20, 2018
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Education is a series of building blocks. You learn how to add and subtract before you learn how to multiply and divide. However, when it comes to money and building wealth, there are IMPORTANT steps that are overlooked or ignored. The result tends to look less than desirable. Here are the ABC’s of personal finance.
Top 3 things to understand when it comes to your finances:


1) Accumulation - ALWAYS Pay yourself first! Create a budget and make YOU one of the bills. Treat it the same as you would your electric bill or your cell phone bill. You wouldn’t just stop paying those, so don’t stop paying yourself. Ideally, you should be saving at least 20% of your annual income. If you can’t start there, figure out a percentage that you can work with consistently. When you receive a bonus or a raise, make sure you address “your bill” first before adding that additional money into your lifestyle pipeline.


Savings on a regular and ongoing basis will always trump chasing a rate of return.


2) Barrier –Protect yourself from life’s lemons. We all know life is not a straight line. You will be thrown curve balls, so put a moat around your money. We never expect to get fired, laid off, sick or injured. But when it does happen the effects on your income, savings and future can be nasty. Whether you have group benefits at work or not, it is vital that you OWN your protection. The disability and life insurance offered by your employer should not be your only line of defense. Disability only
covers 60% of your income, and when it comes from your employer your benefit is taxed. Individually owned policy benefits are not. Life insurance from an employer is rarely anywhere near what would allow your family to survive without your income. Besides, not everyone can qualify for these benefits in the marketplace. Your age and health will dictate eligibility so don’t wait get these while you are young, keep them because it is a game changer if you don’t.


3) Cash - I am not speaking about cash in the literal sense, (but I needed a “C”) I am referring to having a level of liquidity. Before you start socking money into your company’s 401k, make sure you have a reserve fund (6 to 8 months minimum). Too many people ignore this one and immediately start putting their money “in jail” in a retirement fund. The problem, accessing that money prior to 59 ½ will lead to penalties and taxes. Taking a loan out from a 401k to pay for life’s curve balls is a one-two punch. Not only have you now increased your tax liability and paid a penalty, but you are robbing from your tomorrows to pay for today. Create a “rainy day fund” FIRST, then add to a retirement fund.


And remember it is never too late to go back to basics. If you have made financial missteps, sit down with a professional and get on the right track. Your future self will thank you for it.


Stacey Adams is a Registered Representative of Park Avenue Securities LLC (PAS), Securities products/services offered through PAS, a registered broker/dealer. Financial Representative, The Guardian Network® is a network of preferred providers authorized to offer products of The Guardian Life Insurance Company of America (Guardian), New York, NY and its subsidiaries. Alliance Financial Group, Inc. is an independent agency and not an affiliate or subsidiary of Guardian. The Guardian Life Insurance Company of America (Guardian), New York, NY. PAS is an indirect, wholly owned subsidiary of Guardian. Alliance Financial Group is not an affiliate or subsidiary of PAS. PAS is a member of FINRA, SIPC.

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