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The Key to Consistent Investing?
PAYING YOURSELF
FIRST
C
onsistency is a key ingredient of success in
many activities – including investing. And one
technique that can help you become a more
consistent investor is paying yourself first.
Many people have the best of intentions when it
comes to investing. They know how important is it to
put money away for long-term goals, especially the goal
of a comfortable retirement. Yet they may only invest
sporadically. Why? Because they wait until they’ve taken
care of all the bills – mortgage, utilities, car payments and
so on – before they feel comfortable enough to write a
check for their investments. And by the time they reach
that point, they might even decide there’s something
more fun to do with what’s left of their money.
How can you avoid falling into this habit of intermittent
investing? By paying yourself first. Each month, have your
bank move money from your checking or savings account
into the investments of your choice. By taking this hassle-
free approach, rather than counting on your ability to send
a check, you can help ensure you actually do contribute to
your investments, month after month.
By moving the money automatically, you probably
won’t miss it, and, like most people who follow this
technique, you will find ways to economize, as needed, to
make up for whatever you’re investing.
You already may be doing something quite similar if
you have a 401(k) or other retirement plan at work. You
choose a percentage of your earnings to go into your
plan, and the money is taken out of your paycheck. (And
if you’re fortunate, your employer will match some of your
contributions, too.)
But even if you do have a 401(k), you’re probably also
eligible to contribute to an IRA – which is a great vehicle
for your pay-yourself-first strategy. You can put in up to
$5,500 per year to a traditional or Roth IRA (or $6,500 if
you’re 50 or older), so, if you are able to “max out” for the
year, you could simply divide $5,500 or $6,500 by 12 and
have either $458 or $541 moved from your savings or
checking account each month into your IRA. Of course,
you don’t have to put in the full $5,500 or $6,500 each
year, although some IRAs do require minimum amounts to
at least open the account.
You might think such modest amounts won’t add up
to a lot, but after a few years, you could be surprised at
how much you’ve accumulated. Plus, you may not always
be limited to contributing relatively small sums, because
as your career advances, your earnings may increase
significantly, allowing you to boost your IRA contributions
continually.
In any case, here’s the key point: When you invest, it’s
all right to start small – as long as you keep at it. And the
best way to ensure you continue investing regularly is to
pay yourself first. If you do it long enough, it will become
routine – and it will be one habit you won’t want to break.
This article was written by Edward Jones for use by your local
Edward Jones Financial Advisor.
Edward Jones, its employees and financial advisors cannot
provide tax or legal advice. You should consult your attorney or
qualified tax advisor regarding your situation.
Matt Dudkowski, AAMS® | Financial Advisor | 1007 Mt Royal Blvd. Pittsburgh, PA 15223 | 412.487.3300
[email protected] | www.edwardjones.com
Matt Dudkowski has been a financial advisor with Edward Jones since 2002, serving individual investors in
the Pittsburgh area from his Shaler Township office. In January of 2015, Dudkowski accepted an invitation
to become a limited partner with the firm.
Since joining Edward Jones, Dudkowski has obtained the professional designation of AAMS®. Prior to Edward
Jones, Dudkowski, as a CPA, worked at the H.J. Heinz Company, and at Ernst & Young LLP.
He currently serves on the board of directors for Keystone Wellness Programs, a local nonprofit organization.
A native of Butler County and a graduate of the University
of Notre Dame, Dudkowski resides in Gibsonia with his wife,
two sons and daughter.
shaler
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spring 2019
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