As we chug along through the first half of this year, it’s now May, meaning it’s time for an addition to our “Best Financial Advice I Ever Received” Series. This month’s financial wisdom, tips and tricks come from Northeast Security BankVice President Bill Meyer. In this installment, Bill discusses retirement, savings accounts and the importance of completing an annual financial statement.
When it comes to retirement accounts, Bill emphasizes that “It’s extremely important to contribute to a retirement account as early and much as possible. The sooner you start saving, the faster your investment will begin what is called the ‘snowball effect.’” The interest gained by your investment will be added to your account. The growth of your account means more interest gained, resulting in account growth, and so on.
Bill adds that “It’s always a good idea to have a savings account set aside. Think of it as an emergency fund only. Once you do this, you will have the funds sitting there to help get you through unexpected circumstances such as the transmission going out of your vehicle, or an unexpected trip to the emergency room.” This is a much cheaper option than simply using a credit card, and allows you to pay bills on time to prevent fees and interest build-up.
And though many of us take financial statements for granted, Bill says “Completing a financial statement on an annual basis is a great way to determine if you are going in the right direction financially. We make several decisions through the year, such as do we trade our vehicles in, how much do we spend on Christmas this year and how much should I contribute to my 401k this year.” By forcing ourselves to really scrutinize our financial situation we can see if we made good or bad financial decisions throughout the year.
So remember: contribute to a retirement account as soon as possible, build up an emergency fund and force yourself to complete a financial statement every year to keep a clear focus of your financial goals. Stay tuned for another blog post this month, and check back in June for more great advice from our Northeast Security Bank staff!