TREAT (Don’t Trick) Yourself
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By: Katy L. Chase, CFP®, MBA
Securities are offered through First Allied Securities, Inc. (FASI), a registered Broker Dealer, Member FINRA/ SIPC. Advisory ser
Inc., fun
a Registered
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Wealth Management
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is nances
not a subsidia
Th is time of Financial
year is Advisors,
fi lled with
costumes,
scary movies,
and Lighthouse
tasty indulgences.
Why not (LWM).
treat your
this Fall with a few simple alterations so you can reap the rewards in the future.
Th e fi rst way to treat your fi nances is to pay yourself fi rst. Although one of the most iconic pieces of fi nancial
advice, there is value in taking it to heart. Here are some steps you can take:
Skim money off the top of every pay check.
Most people dedicate a certain dollar fi gure or percentage
of salary towards a retirement account because payroll
deductions are oft en times the only way to contribute to an
employer-sponsored plan. Some plans also allow employees to
dedicate a specifi ed amount towards
a savings account or another
investment account. If you can set
up a contribution to your accounts
through your payroll department
this is great because then you have
already saved before the left -over
money even hits your bank account.
*If you have an employer-sponsored
retirement plan that off ers a match,
make sure you are maximizing the
match so as to receive the most “free
money” * If the match is 100% on
the fi rst 3% and 50% on the next 3%,
make sure a full 6% contribution is
going in so as to receive the full 4.5%
match. Get an instant raise!
Monthly deposits into investing or savings accounts.
Another way to pay yourself fi rst is to set up an auto-draft into
an investment or savings account so it is “paid” similar to your
other monthly bills. Designate $200/month to a brokerage
account and it gets paid just like you pay a water bill. Th e
biggest benefi t: you’re giving money to your future self.
Increase your savings amount each raise.
Every time you get a raise (or a bonus), gradually increase
your contributions and/or savings. Th is is a double benefi t:
there is still a bump up of pocket cash and more is saved for
retirement, brokerage, or emergency accounts.
Taking small bites out of the big savings picture can make a big
diff erence. You’ll be happy you did in the future.
Th e second way to treat your fi nances, and the reason to start
treating them now, is the benefi t of time.
Value of compounding.
Compounding is like a magic trick for
your fi nances. A $200 starting account
value with a $100/month contribution,
earning 7% (compounded daily) for
10 years has the potential to turn
into almost $18,000. Th e same $200
starting account value grown for 30
years, has the potential to turn into
more than $124,000. Time is on your
side when it comes to compounding.
Start now to develop a habit of saving,
then build on your habit to gradually
increase the amount you save.
Whether you are just out of college
or well into your earnings years, the
habit of saving can have a positive
eff ect for your future. *Many investors grow their accounts in
the last 10 or so years before retirement* In part, this is true
because savings accounts have accumulated for 20+ years
and the compounding eff ects take place on a larger number;
additionally, investors are in their highest earnings years right
before retirement and are able to save more.
Treat yourself to a more secure fi nancial future and start
saving today.
Katy Chase is a fi nancial advisor at Lighthouse Wealth Management.
She and her husband, Tom, reside in the Lake Linganore community.
She can be reached at KATY@LIGHTHOUSEWLTH.COM with
questions.
Securities off ered through First Allied Securities, Inc. Member FINRA/SIPC. Advisory services off ered through Lighthouse Wealth Management, a registered investment advisor not affi liated with First Allied
Securities Inc. Th e opinions voiced in this material are for general information only and are not intended to provide specifi c advice or recommendations for any individual.