Broker Check

Monday Money Report

| October 19, 2020

Earnings season began last week, when publicly traded companies report their financial results for the quarter. Overall, the S&P 500 Index was essentially flat, with good news about earnings and increased consumer spending offsetting the stalled stimulus talks.

It’s important to remember that stocks are forward looking, so they are ahead of where we are economically.  And the indexes really represent big corporate America, not Main Street businesses.  This is why it may seem like a disconnect between local businesses closing and the market doing so well.

We’ve gotten a few questions about the smaller folks, too.  People who are just getting started.  From a financial standpoint, if you’re in a hole, the first thing is to stop digging yourself any deeper.  Find a side hustle, see what you can do to improve your work situation, anything to increase cash flow. Then, build emergency savings.  It’s not sexy, it’s not exciting, but having a strong emergency fund is the first step on the road to financial independence.

I usually recommend setting up a savings account or money market that you won’t see when you check your account balance.  Out of sight, out of mind.  Because even if you know that money’s not available, your subconscious is figuring out all the things you can spend it on. If it’s possible, have your paycheck split into two deposits.  Make a direct contribution from each paycheck into that savings account.  Start small.  For some people, that’s $5 and for some, that’s $500.  But you want it to be an amount that doesn’t impact you. 

Give it a few months, then increase the amount going into savings. Keep doing that every few months until you reach a point where it’s noticeable.  Reduce it to the previous level if needed, but keep contributing.  Remember that you’ll end up dipping into the account from time to time – a medical bill, a car repair.  That’s what the money is there for.   The long-term goal is six months of living expenses saved and easily available.

If you’re also worried about paying off credit card debt, make your minimum payments and build up a small cash reserve, $500 to $1,000.  Then focus everything you can on paying off that debt.

Another step on the road to financial independence is a retirement account.  You can do the same thing here.  Start small, and increase your contribution every time you get a raise.  If you have an employer-sponsored plan like a 401(k), and they offer a match, do everything you can to contribute enough to get that full match.  It’s free money.

Little steps now can lead to big things later on.  Having an emergency fund is one the key parts of a solid financial plan.

Have more questions? We have some great resources, including calculators, videos and articles on our website at, or visit our Facebook page to learn about our line-up of educational events.

Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Great Valley Advisor Group, a Registered Investment Advisor. CovingtonAlsina and Great Valley Advisor Group are separate entities from LPL Financial.

All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investment(s) may be appropriate for you, consult with your attorney, accountant, and financial advisor or tax advisor prior to investing.