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Don't Wait! It's Never Too Early to Invest!

By Sadie Fowler

Money is something that individuals usually need more of but frequently find in short supply. In short, people worry about money — a lot!

Studies show that about 53 percent of Americans are worried about having enough money for retirement. Taking charge of personal finances may seem like a difficult undertaking, but you don’t have to make drastic lifestyle changes to grow your savings.

“The worst thing young professionals will do is wait until they are ‘making more money’ to start investing,” said Tony Salyer, president of American Bank and Trust. “If your company offers a 401k with matching, work to contribute at least as much as the percentage they match. If there is no 401k, then have an automatic draft to invest in an account that will grow with you.” Simply doing this, saving in small steps, will make a much bigger difference in one’s future than it might seem.

A simple $50 per month can easily grow to $20,000 in 15 years.

“Imagine annually if you increase the amount you invest monthly what the balance would grow to,” Salyer said. “Start saving and investing early. Being consistent and staying in for the long term will pay the highest benefit.”

The financial industry has changed greatly over the last 50 years, and middle class men and women looking to grow their money have no doubt experienced that change firsthand. Despite the changes, men and women, including those from the middle class ranks, can still find financial advisors who can help them plan their financial futures — and they should.

Arguably the best way to find a financial advisor is to seek recommendations from family and friends, ideally those in similar financial shape as you. Though larger firms may prefer to cater toward larger accounts, some firms make a point of aiming to this often-underserved market. There are lots of options in Bowling Green (see list of local options within
this feature).

When asking friends and family for recommendations, try to determine if any of the people you speak with have their own broker or simply speak with customer representatives when issues arises. Companies that provide you with your own broker may be easier to work with and more likely to listen to your specific needs or concerns. Above all, it’s important you’re comfortable with the person you choose to assist you with your investing needs.

How To Better-Use Your Tax Refund

Income tax season, just recently in our rear-view window, is a happy time for many people. Those who anticipate a considerable refund on their taxes look forward to having extra money; some individuals even plan to finance big-ticket purchases entirely with their tax refunds.

Smart money management can turn a refund check into a nice nest egg or stretch dollars to make the most of this windfall of cash. When looking to make the most of your tax refund, start by organizing your financial documents and getting a grasp on your spending and saving behaviors. Examine your income to-expenditures ratio to see where the majority of your money is going. It can be difficult to make significant changes with regard to your finances if you don’t have ready access to your financial records and a strong appreciation of how your money is being spent.

When addressing your finances, take inventory of any high interest loans, including credit card bills. It will save you more money in the long run to pay off this type of debt as soon as possible. The earlier such debts are gone, the less you will ultimately pay in interest.

What’s more, paying off debt helps establish a better credit record and score, which can make you eligible for lower interest rates in the future. Using a refund to eliminate debt is more beneficial than simply letting the refund sit in the bank, where it’s likely to accrue less interest each month than the interest that accrues on your credit accounts with outstanding balances.

It is estimated that customers who don’t have an account at a bank or credit union spend, on average, more than $800 at check-cashing businesses each year.

Your income tax refund may be just what you need to start investing. A study by TD Ameritrade indicated 63 percent of respondents said they plan to save or invest at least part of the money they get back on their taxes. A financial planner or stock broker can guide you through potential investments that carry the right portfolio and level of risk for your needs.

If you prefer to do the work yourself, many investment companies have user-friendly websites where account holders can manage their own investments and monitor the daily performance of those investments. With the right investment, you can turn your refund into a substantial amount of money over the course of several years.

Stretching tax refund dollars means making smart choices regarding money management. Rather than splurging tax returns on big-ticket items, use your refund to grow your savings, begin an investment portfolio or pay down debt.

What's Your Approach? 

Many investors find it’s best to work with financial advisors whose approach to investing and financial planning matches their own. Again, don’t be afraid to ask questions about money matters that pertain to your future.

If you’re risk averse, then you likely won’t be comfortable working with a financial planner whose approach is aggressive. Likewise, if your goal is to make as much money as possible and you don’t mind taking risks, then a more conservative planner likely won’t be able to yield the types of results for which you’re looking.

Identify your own approach to investing and planning, and then look for a planner who shares that philosophy.

Upon looking for a financial advisor, smaller investors may have to look a little harder in an industry that’s waiting to welcome them with open arms. However, there are ways for middle class investors in Bowling Green to find financial planners who are willing and capable of managing their money.

The most important thing you can do is start early and do something to grow your money!

Money Saving Tip

There are many ways to budget your money as well as save. Below are a few tips to take on your quest of living a more financially-conscious life.

Keep financial records

It’s hard to determine your financial standing if you do not prioritize record-keeping. Find a method that you can stick with consistently. Some people prefer old-fashioned bookkeeping with pen and paper, while others may like the convenience of software and mobile apps. Having financial matters clearly visible in black and white can show a clear picture of how much money is coming in and how much is being spent.

Explore auto-withdrawal and deposit
Many financial institutions offer several services to customers that can make banking and money management easier. You can set up a savings account and have money automatically deducted from your paycheck and deposited into this account. Even small deposits add up over time. You also can arrange for automatic bill pay so you don’t have to worry about accruing late fees for missed payments. Check with your bank or credit union about these types of services.

Put a change jar in your house
Change might not be popular, but it is money. Having a jar or bucket in a location of the house where you set your wallet or purse may encourage you to save that loose change for something larger. Place loose change in the jar and watch it add up. Some banks have coin counting machines, which can make it even easier to cash in your change.

Sign up for shop-and-earn programs
Everyone from credit card companies to major retailers offer incentives to repeat customers. These include cash-back or other perks for a percentage of the money spent on purchases. These programs equate to built-in discounts and can help you squirrel away even more money without making a conscious effort.

Consider investing
Investing can put your money to work in exchange for a return. There are many different types of investments available. If you are an investing novice, work with a financial planner or broker who can help you find a level of risk you are comfortable with.

Pay off debt
The earlier you can get rid of outstanding debt, the better. Put money toward high-interest loans and credit cards so you aren’t paying so much in costly interest charges. Afterward, you can start saving in earnest. 

Learning to take charge of personal finances early on can set you on a course for financial stability throughout your life.

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