The Best Time to Start a Financial Plan is Now

by Tricia Bush, CPA, CFP^® Owner, AAA Advisory LLC

Part 1: Getting Started with Investing

When to Begin and Where to Start

For many people, investing feels overwhelming before it ever begins. The terminology can sound intimidating, the decisions feel permanent, and there’s often a fear of “doing it wrong.”

I remember when I was younger and finally had a little extra money to put aside. The stock market felt scary and complicated. It seemed like every headline was either “the market is at an all-time high” or “a crash is right around the corner.” It felt like if I jumped in at the wrong time, I’d immediately regret it.

Because of that fear, many capable, hardworking people delay investing altogether, waiting for the perfect time, the perfect knowledge, or the perfect plan.

At the same time, as a young tax preparer, I noticed something important. The clients who were the most financially comfortable weren’t necessarily the highest earners. They were the ones who had invested consistently and allowed their money to work for them, not just working harder for their money.

That’s when I knew I had to start doing something.

The question became: When do you start, and where do you start?

Step One: Build the Financial Foundation

Before investing, it’s important to make sure your financial base is stable. While the goal of investing is to grow your assets, the results aren’t always immediate. In the short term, markets go up and down, and there will be periods when your investments temporarily lose value. Because of that, it’s important not to invest money you’ll need right away.

A strong first step is establishing an emergency fund, typically three to six months of essential living expenses. This money should be kept in a safe, easily accessible account, preferably with high-yield interest. Having cash available for unexpected events, job changes, medical expenses, or home repairs helps prevent you from needing to sell investments at the wrong time.

Honestly, when you’re starting out, this can feel like an impossible goal. But setting up automatic savings can make steady progress surprisingly achievable.

At the same time, this goal needs to be balanced with high-interest debt, especially credit cards. High-interest debt can quickly undermine your ability to save and invest. Credit cards often carry interest rates well above what long-term investing is likely to earn. Paying them down is one of the most impactful financial moves you can make.

A Simple Example

Imagine someone has $10,000 in credit card debt at a 30 percent interest rate and $500 per month to put toward either the debt payments or invest.  They can choose to pay minimum payment on the credit cards and invest the rest, or pay off the debt first and then start investing. After five years, assuming an income rate of 8 percent, if they made the minimum payment and invested the rest, their net worth would be $0 (debt would almost be equal to the investment earnings).  But if they put all of it towards debt first and then started investing, their net worth would be $15,000 and growing!

This example shows why paying off high-interest debt first is often the most powerful financial move. Every extra dollar toward the card is like earning a risk-free 30 percent return, and it clears the way for future investments to grow without being undermined by compounding debt.

One additional consideration before investing: short-term goals. If you expect to make a major purchase in the next one to three years, such as a car, home improvement, or planned life event, those funds are generally better kept in cash. Market fluctuations can affect availability when timing matters.

This step isn’t about delaying investing forever. It’s about creating stability, so investing can actually work for you.

Step Two: Use Workplace Retirement Plans First

Once your foundation is in place, many people’s first investing opportunity comes through a workplace retirement plan such as a 401(k) or 403(b).

If your employer offers a matching contribution, this is typically the first investing priority. Employer matches are essentially free money added to your savings and can dramatically accelerate long-term growth. If you have at least a basic emergency cushion, enough to handle something like a surprise car repair, the employer match is often the exception to “waiting” to invest. Very few financial decisions can beat an instant return from your employer.

That said, it’s usually wise not to contribute beyond the match until high-interest debt is under control and your financial footing is stronger, as noted in the earlier example.

After capturing the full match, the next decision is whether contributions should be pre-tax, Roth, or a combination:

Pre-tax contributions lower your taxable income today.

Roth contributions are made after tax but can be withdrawn tax-free later.

There’s no universal right answer. This depends on income, tax rates, and long-term goals. The most important step is starting, not perfectly optimizing every detail.

Step Three: Add an Individual Retirement Account (IRA)

If you have additional funds to invest in after your workplace plan, a Roth IRA is often a powerful next step for those who are eligible.

Roth IRAs offer tax-free growth, tax-free withdrawals in retirement, and flexibility that complement workplace retirement plans. There is also flexibility to dip into Roth IRA contributions before age 59½, so you have more choices in case of an emergency. 

Step Four: Investing Beyond Retirement Accounts

Only after retirement accounts are well underway does it usually make sense to invest in a taxable brokerage account.

These accounts offer flexibility for goals beyond retirement and don’t have contribution limits, but they also lack the built-in tax advantages of retirement accounts.  They are where most people want to start investing, but the truth is real investing is the long-game, and retirement accounts are typically the best place to park your long-term investments.

Stay tuned for Part 2 in next month’s issue, where the focus shifts from where you invest to how you invest. 

Disclosure: This article is for educational purposes only and is not intended to be investment, tax, or financial advice. Individual situations vary, and investment decisions should be made based on your personal financial circumstances and goals. Consider consulting with a qualified financial professional before making investment decisions.