Before You Buy That Expensive Car, the SEC Would Like a Word About Your Budget

The U.S. Securities and Exchange Commission, the federal agency that polices the stock market, keeps a short, free guide on its consumer site called Build Wealth Over Time Through Saving and Investing. Its pitch is the opposite of a late-night infomercial. There is no secret, no hot tip and no countdown clock. There are five tips, and they reward patience.¹

The guide says you can improve your chances of financial security by keeping credit card debt under control, building an emergency fund and setting aside part of each paycheck for long-term goals like retirement. It boils the whole idea down to a formula: regular investments plus time leads to wealth.¹ It is general educational guidance, not personalized advice.

Here is that advice, broken into six steps you could start on this week.

1. Go after high-interest credit card debt first. Credit cards charge steep interest when you don’t pay the balance every month. The SEC points out that no investment offers guaranteed returns big enough to outweigh that interest, so its advice is to pay the debt down and live within your means.¹

2. Find out where your money actually goes. Knowing your monthly income and bills lets you build a budget with room left over to save and invest. One pro tip in the guide gets unusually specific: skipping an expensive car purchase can shrink your monthly expenses.¹ Few government documents take a position on your next car, but this one does.

3. Start an emergency fund on autopilot. The guide suggests opening a savings account at a bank or credit union and setting up automatic deposits every pay period.¹ The SEC’s broader Save and Invest roadmap lists small savings and saving for a rainy day among its steps.²

4. Invest a steady slice of every paycheck. The SEC offers examples like 5% or 10% of your income, or any fixed amount you can afford, invested each pay period throughout your career. When your income goes up or your expenses go down, it suggests raising that amount.¹ The guide says investing may carry more risk than keeping money in the bank, but it gives you a better chance of building wealth over time.¹

For people who don’t want to pick stocks, the page describes diversified funds, which spread money across many companies or securities and may reduce risk. It also describes target date funds, which shift automatically from mostly stocks early in a career to a more conservative mix near retirement.¹

5. Use a 401(k), then consider an IRA. The SEC suggests starting with a workplace 401(k), a retirement account offered through your job, because contributions come with a tax break and your employer may match them up to a limit. The guide calls that match free money.¹ According to CNBC Select, matches are often 3% to 6% of salary, so it is worth contributing enough to collect the full amount.³

An IRA, or individual retirement account, is a second account you can open yourself, and it also carries tax advantages. The SEC suggests automating contributions to both.¹ For 2026, the employee 401(k) contribution limit is $24,500 and the IRA limit is $7,500, according to CNBC Select and Wealth Enhancement Group, which cite the IRS.³⁴

6. Check out the professionals, and learn the scam signals. Before you work with a broker or investment adviser, the SEC says you should look them up on Investor.gov, confirm they are licensed and registered, and review their employment history for red flags.¹

Scammers push fake investments through social media, texts, emails and group chats, the guide warns, and any promotion that makes getting rich sound easy or quick is likely a scam. Its list of red flags includes:¹

• Guaranteed high returns with little or no risk
• Unlicensed or unregistered professionals
• Pitches through group chats or social media
• False claims of SEC registration or endorsement
• Requests to pay money to withdraw your funds

The guide also favors sitting still. It says research generally shows frequent trading does more harm than good to long-term returns, and that short-term gains are typically taxed more heavily than investments held at least a year.¹

None of these steps requires a windfall. They require a budget, a few automatic transfers and the patience to let years do most of the work.