OK, so you have made the decision to get started. How do you go about it? At SMART Group Houston, we start with the total picture of your current situation.

Up to your ears in debt?

Gen X and Gen Y generations (and maybe even some late Baby boomers) are reeling from college debt, and many move home again to live with Mom and Dad as they start their careers and try to pay off some college debt.  Today the average borrower graduates with $20,000 in student loans. (Source: www.collegeboard.com for 2007-2008 undergraduates who borrowed) They also have pressure from interviews and new jobs to upgrade their wardrobes and transportation. Before you know it, the credit cards are hitting their maximums too. Do you fall into this category?

Saving money for the future is not a priority for this group of younger adults. They know they should think about it, but demands (or desires) of lifestyle often win out. Besides, they reason, my income will keep going up and I’ll start later.

OK, so you have made the decision to get started. How do you go about it? At SMART Group Houston, we start with the total picture of your current situation. We look at both your debt (the deductible kind like mortgage interest and the non-deductible kind like credit card or auto loan interest) as well as your lifestyle expenses and your desires for the future. As an example, if you are paying interest on consumer debt in the 10%-20% range, does it make sense to put money where you may earn 2-3%?

Plan for emergencies:

When you get your credit card debt to the point you can pay off the whole balance every month, you want to build up in the range of 3-6 months of cash reserves. The new credit card statements are showing how long it will take you to pay off your balance if you only make the minimum payment each month and you don’t make any new purchases. This can help people have a more realistic picture of how their credit card bills can mount up.  Most people seem to have some sort of “surprise” on a regular basis, whether it’s new tires or a root canal. These are not really discretionary expenses that can be postponed.

Build a foundation:

We approach your financial future like you are building a house. We want to help you build a strong foundation of protection that will help you prepare for the future. Then, we put up the walls of savings and add the roof of growth. We see a lot of young people who want to start with the roof. They may have read about the stock market gains of the 90’s where people made money on, what seemed at the time, a daily or weekly basis. We look at growth as “hoped for” results. A solid foundation that does not wash away with the hurricanes of life is the best way to build your financial house. The first decade of the 21st century (2000-2009) has been called the “lost” decade for the stock market. It has taught people that risk is a verb and in some cases can reduce wealth over a period as long as a decade.

Starting early to save regularly at age 22 instead of waiting to age 33 can potentially result in a greater nest egg with lower total investment. Waiting even later to age 43 to start saving might mean that you would have to keep accumulating to equal the same results as if you had started at age 33.¹ Do you picture yourself working until age 72?

George Abboud, CPA and president of SMART Group often works with the parents of Gen X and Gen Y-ers. Even some of them have waited to get started on their plans for their later years. Perhaps the demands of keeping kids in braces, school activities, private school and then college have caused a delay in their planning. When we start on a foundation of protection with permanent life insurance where you can build a block of available capital while you are living, and the clients are people in their 40’s and 50’s, we’re seeing a lot of health problems or potentially higher costs that make it hard to get started.

You can make a difference in your future health:

Tobacco use (even social smoking) is considered a quantifiable health risk by insurance underwriters. This is probably your most controllable health influence.  Today’s young people often don’t view an occasional cigarette or cigar as “tobacco use” but the insurance companies do if nicotine shows up in their tests.

High blood pressure, diabetes, depression, obesity and excessive use of alcohol all have negative long-term impacts on your overall health, and subsequently, on your life expectancy. If you obtain your life insurance policies in your 20’s and 30’s before these health issues start to creep up on you,  you’ll likely see more favorable offers from the insurance companies which ultimately affect your premium rates and your cash build-up.

Just like your auto insurance is lower if you don’t have a lot of accidents and you’re out of your teens, life insurance rates may be lower with good health and younger age. Of course, the policy selected, the various features available, and the medical exam results all play a part in the offer that the insurance company makes to you.

Once your foundation is in place, we consider your goals, your tolerance for risk, your income tax bracket, and the funds you have available to invest before making recommendations customized specifically for you. The important thing is to get started.

Here are the steps to take today:

1. Call SMART Group Houston for your initial meeting. Bring in your financial data to make our first meeting more productive. Use our Getting Started form and we’ll send you an online link for gathering your financial data.  This is our “getting to know you” meeting and it’s at our expense.
2. Get your debt under control. Take a look at your lifestyle expenses for ways to help reduce additional spending and allow you to pay off the debt you have already built up.
3. Have a cash reserve of 3-6 months of your income for emergencies.
4. Start to build the financial foundation for your future and the future of your loved ones.

So, have we answered the question about when is the right time to start? Today.
You are the youngest you will ever be—today!

Call us at 713-984-8044 to set up your initial meeting right now! For more information, visit us at www.smartgrouphouston.com

SMART Group Houston
5151 Katy Freeway Suite 208
Houston, TX  77007
www.smartgrouphouston.com

713-984-8044

Securities offered through Resource Horizons Group, L.L.C.
Member FINRA, SIPC
Advisory Services offered through Resource Horizons Investment Advisory
1350 Church Street Ext.NE, 3rd floor
Marietta, GA 30060     Ph: 770-319-1970

1Hypothetical example to illustrate the importance of starting early: The example uses a hypothetical constant annual after-tax return of 5.5% each and every year on the savings to achieve the hypothetical nest egg of just over $250,000! Just imagine what Early Saver might  accomplish if the savings continued! This is only an illustration and does not imply any specific product or investment. In the real world, returns will fluctuate with market conditions.

Age when savings begin:	Early Saver	Middle Range	Started Late
Age 22	Save $3,600 per year for 10 years (until age 31)
Age 33		Save $3,600 per year for 29 more years (until age 62)
Age 43			Save $3,600 per year for 29 more years (until age 72)

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