Financial Readiness - Getting Started

Getting Started

Don’t Wait! It’s Easier Than You Think

No one is born knowing how to save or invest. Every successful investor starts with the basics—the information in this brochure.

A few people may stumble into financial security—a wealthy relative may die, or a business may take off. But for most people, the best way to attain financial security is to save and invest over a long period of time.

Time after time, people of even modest means who begin the journey reach financial security and all that it promises: buying a home, paying for educational opportunities for their children, and enjoying a comfortable retirement. If they can do it, so can you!

Making a Financial Plan

What are the things you want to save and invest for?

• Emergencies
• A home
• A car
• Your family
• Educational opportunities
• A comfortable retirement
• A comfortable social life
• Other goals

Make your own list and then think about which goals are the most important to you. List your most important goals first.

Decide how many years you have to meet each specific goal because when you save or invest you’ll need to find a savings or investment option that fits your timeframe for meeting each goal. Many tools exist to help you put your financial plan together.

You’ll find a wealth of information, including calculators and links to non-commercial resources at Investor.gov.

Know Your Current Financial Situation

Sit down and take an honest look at your entire financial situation. You’ll need to figure out on paper what you own and what you owe. You’ll be creating a net worth statement. On one side of the page, list what you own. These are your assets. And on the other side, list what you owe other people, your liabilities or debts.

Subtract your liabilities from your assets. If your assets are larger than your liabilities, you have a positive net worth. If your liabilities are greater than your assets, you have a negative net worth.

You’ll want to update your net worth statement every year to keep track of how you are doing. Don’t be discouraged if you have a negative net worth. If you follow a plan to get into a positive position, you’re doing the right thing.

Know Your Income and Expenses

The next step is to keep track of your monthly income and your expenses. Write down what you and others in your family earn, then your expenses.

The Office of Investor Education and Advocacy has provided this information as a service to investors. It is neither a legal interpretation nor a statement of SEC policy. If you have questions concerning the meaning or application of a particular law or rule, please consult with an attorney who specializes in securities law.