Recently Graduated? How to Establish A Good Credit Score

credit score

Are you a recent college graduate? Are you starting your first job? While it’s extremely important to save money when you are first starting out, it’s also quite important to know how to spend money and understand the concepts behind your credit score and establishing good credit. 

As your first paycheck starts rolling in, make sure you are opening multiple lines of credit, including opening credit cards, putting your name on your school apartment lease, and signing your name on the comcast bill. However, when you open these lines of credit and sign your name, make sure you are paying your bills in full each month. If your roommate hasn’t paid your cable bill, make sure to stay on top of them so it doesn’t impact you down the road. However, if you have been impacted by the coronavirus pandemic and can’t pay the full bill, make sure you understand to pay the minimum and reach to your creditor to figure out a reasonable solution or game plan. 

Here are five important credit concepts that you should be aware of:

  1. Low credit scores can cost  you thousands 
  2. Your credit score actually measures your risk of not paying
  3. Credit repair companies charge for services that maybe you can do yourself 
  4. Your age has nothing to do with your credit score, except for how long you’ve been borrowing credit
  5. All types of companies can check your credit score

Unless you have a perfect credit score, there is always room for improvement. The bottom line is that when you are just starting out, it’s easy to overlook the small steps needed in establishing a good score. However, having a good credit score is something that should be maintained and will impact many financial decisions you are able to make in your lifetime. If you have any questions about your credit score, how to obtain credit or how to fix a bad credit score, please contact us for a free 30 minute consultation.


5 Ways to Manage Your Finances Under COVID-19

5 tips

Managing your finances isn’t simple. Throw a global pandemic into the mix and you might be finding yourself overwhelmed and unprepared for the future. Now is the time to self-educate and start finding ways to manage your money for both the short and long-term. 

Here are a few tips on how to manage and improve your financial situation during the coronavirus pandemic. 


  • Focusing on building savings


While it is always important to invest and allow your money to compound, it is crucial to focus on building up your savings account to ensure you have a cash cushion for a rainy day, or in our case, the coronavirus pandemic. While you may be currently saving around 20-30% of your income, right now focus on investing 10% of your income towards a long-term goal, such as your retirement plan. 


  • Spending money on take-out/delivery, and supporting local businesses


As we approach the beginning of July, finally entering country-wide re-opening stages, it is still important to be supporting local businesses who have suffered a beating these last few months. Ordering takeout/delivery is a great way to mix up your daily meals and give your kitchen a break, while also stimulating the economy. 


  • Building a larger emergency fund


As mentioned earlier, it is crucial to have a cash emergency fund to be able to cover around 6 months of living expenses. No matter your job, we see how great of an impact unprecedented global events can have on our economy, so knowing you have a few dollars in your pocket is a great reassuring measure to take. 


  • Buying Comfort


As we slowly begin to reacclimate into our daily routine, it is important to put our spending into perspective. While there is nothing wrong with retail therapy, there are ways to make online shopping less expensive. Make sure to use free browser extensions to get cash back on your purchases. Also, if you always pay your full credit card balance monthly, you can use your credit card to accumulate miles and points. Lastly, remember to ask yourself if your purchase is necessary and worth it before submitting your order. 


  • Giving more


Now more than ever, it is important to give back to the community and help those who are less fortunate. If you are in a stable financial situation, remember to help those around you by directing your extra income towards donating to charities and organizations you strongly believe in. 


By re-evaluating your financial situation and altering the ways you use your money, you can set yourself up for long-term financial success. Consider speaking to a financial advisor before making any big changes to your current financial plan. We offer a 30-minute complimentary financial consultation for those who have questions or concerns about their personal situation and how we may be able to assist you. If you have any questions on your current situation, please contact us and we will be happy to help you! 

Bullet Journaling Your Way Toward A Budget

bullet journaling

Many of us have tried to create a budget and stick to it at least once. Some people choose apps on their phone or spreadsheets on the computer to help them complete this task. But, for those who prefer a more creative approach, a better option might be bullet journaling. Bullet journaling is an organized system that helps people kickstart their to-do lists, stay on track with goals and switch up their approach to keeping their personal finances in order.

How Does Bullet Journaling Work?

Bullet journals can look like basic line writing, or you can add color and design elements to make it fun and attractive. Regardless of what you want to create, it’s most important to make your journal exciting enough to stick with. Your bullet journal should be customized to your liking in order to help you meet your goals.

How Can Bullet Journaling Help You Reach Your Goals?

Bullet journals are an all-in-one way to keep track of your expenses and reach your goals. It allows you to keep a record of:

  • Your financial goals
  • Your spending habits
  • Miscellaneous observations you have made about your money habits

Being able to actually see everything in writing and holding yourself accountable makes it much easier to keep track of how much you’re spending, what types of items you’re buying and how other factors (like your mood) could be affecting your money habits. 

How to Use Bullet Journaling For Finances

While bullet journaling can be used for anything from tracking sleep patterns to weight loss, dream journaling or tackling your daily to-do list, there are a few ways you can use a bullet journal to develop a better budget.

Plan for Upcoming Purchases or Trips

If you’ve been wanting to make a big purchase or splurge on an upcoming event, use your journal to keep track of how much you need to save. If you are planning for a vacation, find out the cost of flights, hotels, food, etc. and start putting aside money for that. If you are looking to purchase a new car, you can keep track of what your monthly payments would look like based on what the loan costs might be. Drawing a visual representation of what you’re saving for can help make your goals feel more tangible. As you set money aside, you might want to include something in your journal that you can color to visually show how much you have saved.

Track your Monthly Expenses

According to a recent survey, only 14 percent of respondents used cash to pay for everyday purchases.1 Using credit or debit cards for most of your purchases can add an extra challenge when it comes to budgeting since it is an easy way to lose track of how much is being spent.

If you still prefer to avoid cash for your purchases, use your bullet journal to track your credit/debit expenses at the end of each week or month. You should create a list of how much money was spent and what it was spent on.  You can also get creative and draw graphs symbolizing certain categories (food, gas, eating out, entertainment, etc.). Having a visual tool to compare what you’re spending and what you’re saving can be an eye-opening way to reassess your budget.

Pair it With Your Favorite Financial App

If you’re interested in using a budget tracking app, you can always pair your bullet journal with an app like Mint or YNAB. Apps can be more useful in immediately alerting you to overspending and help you budget in real-time. While journaling is still great for reflecting on your spending, an app can help keep you more accountable upfront.


Bullet journaling is a simple way to get your finances in order and it can make staying on track much easier. It provides a way for you to outline what needs to be done in order to accomplish your goals and allows you to constantly remain mindful of your expenses. If you need any assistance in starting your own budget journal or have any questions relating to your future financial goals, please feel free to contact us – we are here to help!


4 Financial Red Flags When Dating Someone New


It might seem strange to talk about finances when you first start dating someone new. People often try to overlook financial issues when embarking on a new relationship as it can be uncomfortable and awkward to discuss. However, if you see a future with that special someone, it’s important to know what kind of financial baggage they might be bringing with them and to be aware of any potential financial red flags.

Red Flag #1: Having Different Approaches to Saving

If your partner is a spender and you are a saver, this could be your first major red flag. It is critical that you both discuss your savings plans and goals in detail. If you share accounts or credit cards, you don’t want one person spending more than their fair share since this would not only negatively affect your savings goals, but it can also create a power struggle over financial control. It’s important to discuss how much money you’re okay spending on certain items and creating a budget that will help you compromise to meet your financial goals. It may be best to keep your finances separate for now, however, if you’re still unable to reach an agreement.

Red Flag #2: Not Discussing Your Credit Scores

Disclosing your credit scores is a must. Depending on what your partner’s credit score is, it could diminish your chances of getting a house together or making any other big purchase in the future.

Red Flag #3: Neglecting To Address Debt 

It is essential that you know what debts your partner may have accumulated and how they plan on handling them. If you’re still getting to know one another, they may not be comfortable divulging the actual amount. You should, however, have a good understanding of whether or not they’re paying it off responsibly and spending wisely. 

Red Flag #4: Not Sharing the Same Financial Goals 

While the relationship is still fairly new, you should outline what your end goals are. It is important to ensure your financial goals are aligned early enough in the relationship to avoid any future disappointment. 


The excitement of any new relationship might cause you to overlook some major financial red flags. But when the time is right, it’s important to address these issues (preferably sooner rather than later) – especially if you’re both in it for the long haul.  If you encounter any of these red flags in your relationship and have any questions regarding your finances, please contact us – we are here to help!  

Ways To Build Wealth And Boost Your Savings While You’re Stuck At Home

finances during quarantine

We’re all spending more time at home these days and it’s likely that money and finances are a stress for many during this pandemic. As the markets continue to be extra volatile,  many people are feeling a lack of control when it comes to their money.  Even though there isn’t much we can do about the state of the overall economy, there are some small-scale things you can do right now, from the comfort of your own home, to help you feel more in control of your finances. If it is all you can do right now to keep up with your bills, that should continue to be your main priority.  However, if you’re in the fortunate position of having an income or some extra cash, the following tasks take 30 minutes or less and might just have you feeling a little better about the state of your finances.




Every solid financial plan starts with a good budget, and now is a great time to go over yours. You should review your spending habits and try to determine which areas of your spending are relatively fixed — such as monthly rent and insurance coverage — and those that are discretionary, like your lattes, subscriptions and eating out. 

Since you’ll likely be spending a lot of time at home this month, most of your convenience purchases will probably trail off. Comparing last month’s expenditures to this month, you will see where you are spending your money and you will be better positioned to make changes to your spending habits in order to prioritize saving money and spending on what you deem essential for your household.




Write down all the things that you want to do in your future – you can do this by yourself or with a significant other. Break it down into five-year segments. What do you want to do, where do you want to go, and what do you want to accomplish during each five-year segment? If you have career goals that include starting a business, making more money, or changing your job, you might need to learn some new skills to start down that path. 

Being confined to our home offices gives us a great opportunity to focus on learning something new and developing plans for the next steps in life, whether it is signing up for an online class or doing some research on what it might take to take your career in another direction.




If you’ve been considering a college savings plan for your child, setting one up online is quick and easy. You should start by reviewing the 529 plan options where you live, since they often provide tax benefits while you save for your child’s college education. Just remember to keep your own future financial goals in mind, as well. Saving for your children’s education is very important, but should come second to saving for your own retirement.




You should make a list of your financial accounts that include beneficiary designations —  like your IRA, 401(k), or life insurance — and make any necessary beneficiary information adjustments. Since these designations determine who will receive your account upon your passing, if they are left blank or not updated, your wishes could be ignored and assets could go to an ex-spouse, or state law could become applicable and decide how to split your accounts.




Now is the perfect time to set up a separate online high-yield savings account for your specific goals, whether it be for a vacation, saving for the holidays or possibly a new car. To make things even easier, you can also set up a direct deposit so that you put a little bit away from each paycheck towards that objective. However, remember that these “extras” should take a backseat to your emergency fund.  Having three to six months of expenses set aside in a money market or high-yield savings account can provide peace of mind and can be a lifesaver in times of temporary job loss or medical costs.




Now might be a good time to do some overall bookkeeping.  This can include reviewing your insurance policies to see if you still have sufficient coverage for your needs, or working on your estate plan (are your medical directives all updated?).  If your kids are old enough, this could even be a good opportunity to teach them how to balance a checkbook by showing them how you do yours.



If you have money in the market that’s earmarked for retirement, you might be a little worried about how current events will impact your goals. Now is a good time to have a call with your financial planner to determine if your portfolio is still meeting your long-term goals, or if it needs to be adjusted based on current events. 


Even though we may not have expected to be spending this much time in our homes over the past few months, it’s important to take advantage of the time while we can.  These unprecedented times have given us the opportunity to slow down and focus on our families, as well as other important aspects of our lives like our finances.  Taking just a half hour each day or week to go over these tasks can help us to feel more in control and less stressed about our money as we deal with the uncertainty of the times.  As always, if you have any questions about any of the suggestions above or any other concerns about your finances, please contact us.  We are here to help and we are all in this together!

What To Do With Your Stimulus Check Once You Receive It

stimulus check

The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act was recently enacted to assist families, individuals, small business owners and medical facilities across America amidst the COVID-19 pandemic.1 As part of this legislation, many individuals and families became eligible to receive stimulus checks of up to $1,200 per person.1 Many Americans have received their checks already, while some are preparing to receive theirs shortly. If you or your household received a check, here are some things you may want to consider doing with it.

#1: Cover the Essentials

The stimulus checks are designed to help Americans who may be financially struggling due to COVID-19. Whether you’ve been furloughed, forced to reduce hours or dragging financially, you should use this money to cover any immediate, essential expenses like rent, utilities, groceries or internet.  

This check should be looked at as a mini emergency fund. Look at your bills over the coming weeks and determine how you can best utilize these funds. If you’re currently receiving unemployment payments from the government, remember to account for this income when making your financial strategy as well. If you are still coming up short after the stimulus check has been used up, remember to check with companies (power companies, insurers, gyms, cable companies, etc.) regarding any relief efforts or forgiveness policies they may have enacted amidst the global pandemic.

#2: Fill Your Emergency Fund

Many adults say they don’t have enough saved to cover a $400 emergency.2  With so many people living paycheck to paycheck, this extra bump in funds could be the cushion needed to prepare for any potential financial surprises.  

Even if your income remains unaffected by the pandemic or you find yourself with some additional dollars leftover, it’s never a bad idea to tuck some away for a rainy day. If you don’t have an emergency fund, saving any surplus from your stimulus check is a good way to start one. An ideal emergency fund should have three to six months’ salary to help cover unexpected expenses such as job loss, medical bills, home damage, car repairs, etc. 

#3: Address High-Interest Debt

Total household debt in America was already quite high before the pandemic hit.  Now, overall American debt is soaring. While some of these debts include lower-interest debts like auto loans or student loans, an extremely large portion of the overall amount is attributed to credit card debt.3

If you’re currently facing any amount of high-interest debt, such as credit cards or personal loans, paying this down should be a top financial priority. If your current financial situation allows it, use your stimulus check to make a dent in (or pay off completely) any high-interest debt your family may have.

#4: Support Local Businesses

It is extremely important to patronize local shops in your community if you are able to. Whether you order food from a local restaurant, purchase gift cards from your favorite boutique or frequent your local coffee shop or bakery for take-out, small business owners have been some of the hardest hit during these times. Many of these small businesses don’t have the backing of a larger corporation or franchise and are experiencing a severe drop in revenue that could jeopardize their ability to stay open after the pandemic.  Your patronage could make a big difference in their ability to continue operation.

#5: Donate It

If you are fortunate enough to be financially comfortable during the COVID-19 pandemic, you may want to consider giving to those most affected – medical facilities, food banks, shelters, etc. The devastating impact of COVID-19 means assistance is needed now more than ever before.

While the ability to make physical donations (such as clothing, toys, pantry items, etc.) may be limited right now, you can still use your stimulus check to provide crucial monetary relief.   You can search for charity organizations using tools such as Charity Navigator or The Better Business Bureau’s Giving Alliance or you may hear about local nonprofits that are in need through social media or word of mouth.  

#6: Fund Your Future Retirement

Even if you are far off from retirement, putting any excess income into a retirement savings account can be a rewarding move. You may consider using your stimulus check to pad your IRA or 401(k) if you are able. The power of compounding interest means that $1,200 could turn into a couple thousand or more by the time retirement rolls around.

In these unprecedented times, many of us are left wondering what the best next move is when it comes to our stimulus checks. No matter what you choose to do, remember to be intentional with these additional dollars. If you have any questions regarding how to move forward when you receive your stimulus check, please contact us.  We are here to help and we are all in this together!


Coronavirus and Student Loan Debt: What You Need to Know

student loan debt

By the end of 2019, student loan in America reached $1.48 trillion.  There were approximately 45 million borrowers across the United States.1  The COVID-19 pandemic has created even greater financial instability for many Americans and those that have student loans may have more difficulty paying them than ever before.  

The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, was recently enacted to provide a wide array of assistance for families and businesses.  The legislation also made some important changes to assist federal student loan borrowers. 

Here are some answers to a few important questions regarding student loan debt during the current pandemic: 

Question #1: Are Interest & Payments Suspended on All Student Loans?

The suspension of payments applies only to student loans that are held by the federal government. However, your FFEL (Federal Family Education Loan) lender or school may suspend interest and payments voluntarily, but they are not required to do so. 

Regarding your federal student loans, all interest and payments are suspended through September 30, 2020.2 

The benefits authorized by the CARES Act do not apply to private student loans that are owned by banks, credit unions, schools or other private entities. If you are trying to suspend payments to these institutions, you will need to contact them directly to find out what your options are. 

Question #2: Should I Apply to Suspend My Payments or Interest?

Until September 30, 2020, there will be no interest accrued or payments due for federal student loans.2 There is no action required on your part as these payments will be stopped automatically.  

Question #3: What Should I Do if I’m Behind on Payments?

On March 25, 2020, the Department of Education announced that it would not be withholding federal tax refunds, Social Security payments or garnishing wages from those who have defaulted on their federal student loan payments.3 In addition, private collection agencies contracted by the government will put a pause on attempting to contact defaulted borrowers. 

No defaulted federal student loan will collect interest until September 30, 2020.3

Many of us are experiencing a certain level of financial stress as we navigate this “new normal” through the COVID-19 pandemic. If you are able to continue to make regular payments to your federal student loans, it is beneficial in the long-run.  However, it is important to know your options have changed. If you have any questions relating to your student loan payments or other financial matters, please contact us.  We are here to help! 


Tips for furloughed workers during the shutdown

A sign declares the National Archive is closed due to a partial federal government shutdown in Washington

Before we get started, lets recognize that this isn’t the first time there’s been a shutdown, and it probably won’t be the last. But that doesn’t change the fact that so many workers are now reaching their third week of no pay. There are roughly 800,000 federal employees who are not receiving paychecks right now, many of whom are located right here in the DC Metro area. While some are technically on a “leave of absence”, many are being expected to work for no pay. What’s worse is that federal employees already make, on average, quite a bit less than their private sector peers. On top of this, while most workers are expecting to be paid retroactively once the shutdown is over, it’s not mandatory.

First and foremost, take a look at your monthly budget and find items you can easily remove.

Another helpful tip is to contact your bank. In fact, one institution headquartered here in the DC Metro, Navy Federal Credit Union,  is extending a zero-interest loan up to $6,000 with no fees and a grace period. Many banks are willing to make exceptions. Bank of America and Wells Fargo also have outreach programs that assist federal employees. Most institutions have similar processes in place for their employees that allow them to contact creditors and landlords in order to ask for assistance.

Another step that federal employees can take is to proactively reach out to creditors. Best move? Develop a simple letter that explains your situation: “I am a government employee who has lost income due to the government shutdown. Due to these events, my income has been drastically reduced for the time being and I am unable to make my payment in full this month.” On top this, don’t forget to include account numbers and contact information with the letter.

While filing for unemployment may seem like the best “quick fix”, that isn’t necessarily true. A large portion of these federal employees can apply for unemployment while on temporary leave of absence. Unfortunately, this doesn’t cover everyone. For those who are expected to report to work without pay (as mentioned above), do not qualify for these benefits. In most states (and D.C.), if you collect unemployment benefits, and then receive retroactive your pay, you will indeed be require to repay the government.

If you are a government worker who participate in the Thrift Savings Plan, you may take loans from their retirement savings if the furlough is expected to last 30 days or less. You may not take the loan if your leave goes beyond that period. However, remember than once you remove money from your retirement account, that money is no long invested in the market. You will also be required to repay the money, so this should be used as a last resort.

One last note to keep in mind: Be skeptical about picking up work while you are on furlough. Even though the government is shut down, you are still an employee of the federal government. Because of this, certain employment (outside the scope of your federal job)may be restricted.

While these tips may bring short-term relief, the best course of action is to develop a long-term plan for these types of situations. This will be the first time that a government shutdown has extended past two pay periods, making the financial situation for many households that much tighter. No one knows how long the current shutdown will last, or when the next will arise, and that is exactly the reason to be prepared for these types of scenarios.

If you are federal employee who has questions about your day-to-day income during the shutdown, and are wanting to talk to a professional, please feel free to reach out to us. We are more than happy to assist you in this time of instability.


How Much Money Do You Actually Need in America?

Sherman Wealth Management | Fee Only Fiduciary

In my line of business, we talk a lot about wealth management. The idea, of course, is that financial planners and wealth managers assist you in creating a road map for your money that helps you grow savings for lifestyle goals like retirement, purchasing a home, or sending your kids to the college of their dreams. The term “wealth management” often begs the question: What does “being wealthy” mean? And when do you need a financial planner to help you manage your wealth?

How Do People View Wealth?

A recent study has shown that the definition of being wealthy rises as people age. Bloomberg states that Boomers tend to view $2.4 million as a requirement to be “wealthy” whereas millennial’s view wealth as a $2 million requirement. That’s a fairly large discrepancy – and it’s pretty clear what’s causing it. The younger we are, the more likely we are to view our financial future with a sense of optimism. We also tend to be more short-sighted in our financial planning, and believe that a smaller amount of wealth will last longer.

As we age, we become more realistic about our finances. We start to see the big picture, and that honest truth is that we often need a lot more money than we realize.

What Does Wealth Mean to You?

Despite the discrepancy in what quantifies “wealth” among generations, one thing stays the same: people view wealth as several consistent things. They believe that wealth is:

  • Options
  • Freedom
  • The ability to stop worrying
  • A secure future
  • Caring for yourself and your loved ones

Many people also say that being wealthy equates to taking time for themselves in their daily life. According to the same survey, the majority of millennial’s believe that they will be wealthy in the future. However, the same optimism doesn’t translate to Boomers and other generations.

The Importance of Saving

The key to building wealth is saving a lot, and saving early. The sooner you can start to prioritize saving in your budget, the sooner you can begin to take advantage of compound interest. I’ve discussed this in previous blog posts, but to review:

Compound interest is essentially a snowball effect. As a snowball rolls down a hill, it grows in size. Even if you start with a small amount of money invested, it picks up more and more snow with each revolution. By the time you reach the bottom of the hill, the snowball has grown significantly, and will continue to grow faster the more you have invested.

This demonstrates the importance of saving early on in your financial life. Although many millennial’s feel positively about their opportunity for wealth, they won’t be able to capitalize on these goals if they don’t prepare now.

The Importance of a Financial Plan

This wealth study by Bloomberg also indicated that most people, unsurprisingly, felt more secure in their finances when they worked with a financial advisor on constructing their financial plan. Many millennials have yet to employ their own financial advisor, and it’s time to rethink that trend.

At Sherman Wealth, many of my clients are millennial’s. I enjoy working with families and young professionals to both clearly define their goals and help them build a plan that moves them in the right direction. When advisers have the opportunity to work with millennial’s to grow their wealth, they have a leg up on pre-retirees who focus on financial planning as they near retirement: time.

When you implement a financial plan early in life, you have time on your side. With time, your wealth can grow significantly, and working with a financial adviser can help you make the right money moves early on to set yourself up for success in the long run.

Are You Ready?

In my recent video reviewing MarketWatch’s article on what you need saved for retirement by the time you’re 35 years old, I stressed the importance of saving early. It’s critical to start growing your wealth, even as a millennial who has many years until retirement, through targeted savings and a smart investing strategy. The critical thing to remember is you’re not just saving for retirement – you’re saving for all future goals like buying a house, sending your kids to college, or living well throughout your life. Saving is truly the only way to ensure wealth in your future, which means that saving is the only way to ensure options, freedom, and a lack of worrying about money as you age.

If you’d like to discuss your saving strategy, schedule a consultation today. Building a comprehensive financial plan that prioritizes saving while mitigating the impact of taxes and investment fees is key to growing your wealth and building a financial future you can rely on, and I’d love to help.

Patient Investors Come Out on Top


Many feel they don’t have the money they need to invest, so they forego savings altogether. Sound familiar?

If this is you, the time has come for you to stop shooting yourself in the foot, and start saving today. Consistency while saving is key, and can make all the difference over time. Each dollar that you contribute to your portfolio adds up. In the long run, your investments early on can make a real impact, and when the time comes to withdraw your hard earned savings, the interest you’ve earned on your investments will help to provide a comfortable retirement or any long term goal you might be saving towards.

Start Saving Now

Consider the difference of waiting to begin saving. At age 27 you will need to put away $214 a month to reach a goal of $1 million. When you start at age 37, you will need to put away $541 a month to reach your goal. If you wait until age 47, that number rises to $1,491 a month and if you wait until age 57, you’ll need to put away a hefty $5,168 a month. Waiting until the last minute (age 62) would mean having to stash $13,258 a month to reach $1 million by the age 67 – ouch!

When you factor in things like compound interest, the negative impact of delaying your retirement savings becomes increasingly obvious. Compound interest is often compared to a snowball. If a 2-inch snowball starts rolling, it picks up more snow, enough to cover its tiny surface.

As it keeps rolling, the snowball grows, so it picks up more snow with each revolution. If you invest $1,000 in a fund that pays 8% annual interest compounded yearly, in 10 years you’ll have $2,158.93, in 20 years that will be $4,660.96, in 30 years it will be $10,062.66, and in 40 years it will be $21,724.52. It takes patience, but with time you can turn $1,000 into $21,724.52. That sounds like a lot of money, but if we’re being realistic, $1,000 is often spent on:

• A weekend skiing with friends
• A few months of dining out with friends or your spouse
• A new piece of furniture, or tech that you may/may not need

By hitting “pause” on these non-essential goals, you can easily start saving today and take advantage of compound interest.

No matter where you are right now, the crucial point is to begin putting money aside immediately to achieve your long-term financial goals.

What are your future goals?

Travel? Education for your kids? Paying off your mortgage?

Even when you contribute a minimal amount annually, if you’re consistent with that contribution over many years, the growth your investment will make can maximize your wealth in the long ron.

The idea that you don’t have enough money right now to make your investment worthwhile is hurting you and your future. Resist the urge to overthink how much you are investing, and just act by giving what you can to your future savings today. Remember: every dollar counts, and the satisfaction of watching your investment grow over time will give you peace of mind and a freedom to plan for the future.

Don’t Jump Ship When Things Go South

Many investors view themselves as being rationally-minded individuals who don’t take sudden action when the markets become turbulent. Too often, though, people do try to time the markets, and wind up making a wrong decision as a result.

Derek Horstmeyer of the Wall Street Journal writes “Most investors think of themselves as rational and immune from the behavioral elements that periodically roil markets. Human factors, however, do continue to affect our personal portfolio decisions—usually to the detriment of our long-run returns.”

Thinking too much about the “perfect timing” when growing our portfolios is a strategy that will more often than not cause people to lose money in the long run. A far better investment plan is to focus on the big picture, and less on a perfect portfolio – where every decision is made at the exact right time.

Timing the market is less important than time in the market, and getting caught up in getting that “perfect timing” is almost certain to cost you money. Aiming toward a good, solid return on your investment is a smarter strategy than worrying about every detail affecting your portfolio. All too often, people panic as soon as things start to go south (pulling out when the market has already hit bottom and putting in more when at the top). As a result, they often don’t experience this stated return in full. By resisting this urge to make a rash decision, investors showing behavioral restraint may actually wind up saving 1-2 percentage points a year.

Starting early is a critical component to a successful portfolio. It is never too late (or too early) to start, so the sooner the better. Beginning in 2011, studies were conducted where participants were shown a computer generated rendering of what they might look like at their age of retirement. They were then asked to make financial decisions about whether to spend their money today or save that money for the future.

In each study, those individuals who were shown pictures of their future selves allocated more than twice as much money towards their retirement accounts than those who did not see the age-progressed images. Seeing the images gave the participants a connection with their future selves that they did not possess before. As a result, their saving behavior changed dramatically because, “saving is like a choice between spending money today or giving it to a stranger years from now.”

Picture Your Retirement

Instead of viewing your future self as a stranger, think of how you actually might look. Then think of the financial decisions you are making today and how they will affect you in the future.

Are your spending and saving habits today matching up with how well that future self is able to live tomorrow? Every delay you make toward saving for retirement, or investing wisely means a further burden you will place on yourself later on. In fact, starting your retirement saving early is actually more important than earning higher returns at a later date.

The importance of starting now can’t be stressed enough. Luckily, fee-only, fiduciary advisors exist to help everyday people in making wise choices and to lessen the anxiety associated with what can seem like an overwhelming task.

The good news is you don’t even have to be a millionaire to get this customized service. Working with a professional will enable you to maximize your return on investment and tailor a savings plan just for you. Don’t delay getting started. The benefits of starting early and often far outweigh how much you actually save.