201610.05 Posted by Wealth Management

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We all know that we need to take care of our physical health, and the steps to take are usually pretty clear – incorporate healthy habits, have annual checkups, etc. Sometimes the path to financial health doesn’t seem quite as clear. Like your physical health, your financial health requires focus and an ongoing commitment to making wise choices. Here are some commonly asked questions about getting started on the path to financial health.

How do I get started saving money?

One of the easiest ways to start putting money aside is through systematic savings. Systematic savings is a process of setting up an automatic deduction from one account (or from payroll) to another at a scheduled time. For example, you could start with having $25 per month transferred from your checking account to your savings account. An even easier way to get started is to have a set amount of money deposited directly into a savings account from each paycheck. No matter what amount or frequency you chose, the key is to get started on a plan that works for you. The sooner you start saving, the better prepared you will be to face any financial hardship.

How do I balance saving and paying off debt?

It can be tempting to forgo putting money in savings in order to pay off debt. How you choose to allocate between saving and paying off debt is up to you, but it is important to do both at the same time – even if it means starting small with your savings. Having money in savings protects you from going further into debt when unexpected expenses come up.

How much money should I have in an emergency fund?

An emergency fund is an account set aside to be used in case of a personal financial crisis – such as losing a job, medical emergencies or large unexpected repairs. Experts generally recommend that you keep enough money in an emergency fund to cover three to six months’ living expenses. That sounds like a lot, but it is a good goal to set.

What is a 401(k)?

A 401(k) is a retirement savings plan sponsored by an employer. In a 401(k), employees can save and invest part of their paycheck before taxes are taken out. The employee chooses from a selection of investments according to how much risk they are comfortable with and their time frame until retirement. Some companies offer a “matching” contribution, meaning that they will match employee contributions up to a certain percent. Participating in a company 401(k) is a great way to get started on meeting your retirement goals. Starting early helps build your balance faster.

In conclusion, financial health is not something that “just happens.” It takes dedication and commitment, as well as the courage to ask questions and get help when needed. If you feel you need expert advice, contact a financial adviser who can help you establish a plan to work toward financial health and meeting your goals for the future.

For additional guidance, please contact Marci Cartwright at 607-737-3754 or mcartwright@chemungcanal.com.

401k emergency fund financial adviser financial health future goals paying off debt retirement savings savings plan systematic savings