Getting focused on your financial well-being is like starting a diet, it always begins next Monday.  Addressing debt, budgets and the best way forward for your unique financial situation may seem daunting, but getting your finances organized doesn’t have to be as hard as cutting carbs.

Below are a few tips and tricks to keep in mind as you begin to focus on your future financial success.


  1. Understand Your Spending

Every good financial plan starts with understanding your monthly spend (cost of living, bills, debt, etc.).  This provides you with the foundation your long and short-term goals will be based around while on your journey to financial stability.  It is also the first step to becoming an effective investor as you can better map out your finances.

There are a number of ways you can track your spending, but we recommend taking a look at your monthly credit card statements plus your fixed costs (i.e., rent or mortgage) plus any debt payments (i.e., car, student loans, etc.). This will give you an idea of what your necessary spending looks like and serves as a starting point for allocating the remaining cash to meaningful and beneficial ways that work for you – like investing, which can help tack on free money to your existing cash.


  1. Identify Your Budget to Reach Your Unique Goals

Identifying where you want to be in the short and long-term is the first step in creating a roadmap to get you to your goals. When it comes to investing and the level of risk you take, it’s all about your timeframe. For short-term goals (18 months or less) like a house or a dream vacation, you want to have those funds in cash or a high-yield savings account. This is to keep your money safe, because if you have it invested and need it soon, the amount you need may not be there when you go to grab it.

The further out your goal, the more risk you can take with your investments. If you are planning to retire in 30 years, you can take a lot of risk because if the market goes down, you have time to recover. As you get closer to your goal, start to take the risk out of the investments.

If you have your investments aligned with your goals, you won’t be worried about market volatility – you’ll welcome it, as your short-term goals will be safe and your long-term goals will give you a chance to buy more at a lower cost.


  1. Roth 401k vs. Pre-tax 401k

The most important thing to remember about your 401k savings is that you are contributing enough to take advantage of the full match offered by your employer.  With that, there are two primary options offered for retirement savings and the right option is mainly dependent of your stage in life.

A Roth contribution means you pay the tax today, and your money will grow tax free so when you’re ready to withdraw, the qualified distributions will be withdrawn tax free.  A Roth is most advantageous when you are in a lower tax bracket or young enough that the potential growth outweighs paying tax now. Not knowing what tax rates will be when you retire also helps you to plan as the tax has already been paid with the Roth option.

Pre-tax contributions are when you defer the tax until you make a qualified distribution, and then pay tax at the current rates.   The advantage to doing a Pre-tax retirement option is that you lower your taxable income each year you contribute, with the idea that you will be in a lower tax bracket when you retire, so you can defer paying taxes until then.

The choice between which retirement option is better for you depends on your specific situation.


  1. Strategically Allocate Cash

It all starts with budgeting and putting your money in the right vehicles.  Kevin O’Leary, an investor from the show Shark Tank, likes to refer to his money as “soldiers that work for him to create more money”. What he means by that is when you allocate your cash to the right places, you can actually make your money grow and work for you.

Here are some standard best practices for slicing and dicing your cash strategically to get more out of it (literally):

  • 1 month of monthly expenses in checking account
  • 3-6 months of monthly expenses in a high-yield savings account
  • Remaining cash should be invested for short- and long-term goals

Often, we tend to keep too much cash in our checking accounts where it earns nothing.  Using a budget and understanding your short- and long-term goals will help you to put it where it does the most for you.

Another thing to be aware of is contributing too much too early to your 401k or paying off your mortgage too quickly. While there are many benefits to saving early for retirement, you don’t want all of your investments here where you can’t easily get to it if you were to need it.  Before maxing out your contributions, make sure you have enough cash and investments outside your retirement that you can use.

Similarly, you may not want to pay down your mortgage faster than you must if you have a low rate. Instead, think about taking that extra amount that you would be contributing to your mortgage and investing it instead.


In Conclusion

Having a few good habits when it comes to your finances will make a huge difference over the course of your life. By knowing your budget, the timeframe of your goals, and where to best put your money to achieve those goals, you’ll become a better investor, make the most of your money and grow and preserve your wealth.

In case you missed it, we invite you to watch a webinar presentation hosted by Sax Wealth Advisors geared towards providing young professionals with information that can help get their financial life on track and ensure their future financial success.  We addressed the basics of investment and savings strategies to help minimize investment efforts, such as when and how often to invest, your personal financial infrastructure, a comparison of retirement savings vehicles, balancing debt, and more.

Watch the webinar here.


About the Author

Matthew Bernocchi, CFP® is an Associate Wealth Advisor at Sax Wealth Advisors and as concentrates on supporting families, high-net-worth individuals and companies since 2017.  He specializes in financial planning, strategic wealth preservation and portfolio management.  He can be reached at