home Latest News Marc A. Hebert's Money Sense: Small but important steps will help you build wealth over time – The Union Leader

Marc A. Hebert's Money Sense: Small but important steps will help you build wealth over time – The Union Leader

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By MARC A. HEBERT

Building wealth takes time and means doing a lot of little things right. Here are a few of these things to get you started.

Set your goals. Have specific goals and plans to reach them. There might be ones for the short term, such as buying a house, and ones for the longer term, usually including retirement. Make your goals realistic. For example, saving $100,000 for your child’s education in two years would not be possible for most people.

Save early and often. It is easier to amass wealth if you start saving early and allow the effects of compounding to do its job. Even a little saved each week can build to a sizable amount for your new house, a college education, or retirement over the long term.

Have an emergency fund. Having an emergency reserve means you won’t be running up your credit card or tapping into savings for retirement should you receive an unexpected bill. You never know when the car will need a major repair or the plumbing will have to be fixed. Emergency reserves are best kept in a safe, easy-to-access savings or money market account.

Review your home insurance and talk with your agent. Your biggest asset might just be your home. Protecting it with adequate homeowner’s insurance is a must. Review your policy to see if your dwelling coverage is enough to rebuild. Keep the company updated on any improvements that add substantial value to the property. It is also a good time to review the coverage on your other possession to make sure special items, such as jewelry, are properly scheduled. Consider if you need coverage for sewage back-ups or flood insurance.

Polish your credit. Good credit helps you get the lowest interest rates and best terms on any number of things. It might even affect your job prospects, insurance rates and the ability to get an apartment. Don’t max out your credit cards. Keep your credit utilization ratio as low as possible.

Live below your means. Do you really need that expensive car or big house? Use your money to create long-term wealth.

Cultivate your career. Spend time each day on your career, whether it is informally by just reading about the industry you are in, or formally by taking career advancement courses. Keep your skills sharp and never stop networking. This can help protect your ability to earn.

Review your auto and homeowners liability coverage. One important part of your auto policy is the liability coverage. This is coverage that protects your assets and future earnings. If you are found liable for injuries and damages as a result of an accident, this coverage will help pay the costs. Make sure you have uninsured motorists and underinsured motorist coverage, if appropriate. This can help pay for damages, medical expenses, and lost wages if the other at-fault driver does not have coverage. To further protect yourself, obtain an umbrella liability policy. Remember to re-shop your coverage periodically.

Budget, budget, budget. Get on top of your spending. Longer term goals are harder to get a handle on when you don’t know where your money is going. Monitor your cash flows for several months. This will help you see where you can cut expenses in order to save more.

Let your employer help. In addition to your contribution to a 401(k), your employer might make a matching contribution. Make sure you contribute enough to your 401(k) to take full advantage of this match.

For further insights, consider seeking professional advice. A financial planner can help you review all aspects of your financial life and give you additional guidance to get you started with your wealth building.

Marc A. Hebert, M.S., CFP, is a senior member and president of the wealth management and financial planning firm The Harbor Group of Bedford. Email questions to Marc at mhebert@harborgroup.com. Your question and his response might appear in a future column.