I love the stock market, but personal finances are 10X more important than stock picking.
Here's the step by step process to make your finances bulletproof:
Here's the step by step process to make your finances bulletproof:
1: Get organized
You can’t make good decisions without good information.
Track your:
▪️Income (monthly & yearly)
▪️Expenses
▪️Net Worth
I used a simple Google Sheet, but there are lots of great tools
You can’t make good decisions without good information.
Track your:
▪️Income (monthly & yearly)
▪️Expenses
▪️Net Worth
I used a simple Google Sheet, but there are lots of great tools
2: Optimize insurance coverage
Insurance is boring, but it prevents financial catastrophes.
I have insurance for:
▪️Auto
▪️Health
▪️Homeowners
▪️Identity theft
▪️Term Life
▪️Umbrella
Insurance is boring, but it prevents financial catastrophes.
I have insurance for:
▪️Auto
▪️Health
▪️Homeowners
▪️Identity theft
▪️Term Life
▪️Umbrella
3: Align spending with your values
I review my expense from step 1 and ask, “Am I getting enough value to justify this expense?”
If yes, I keep it (or increase it).
If not, I find ways to reduce/eliminate it.
I review my expense from step 1 and ask, “Am I getting enough value to justify this expense?”
If yes, I keep it (or increase it).
If not, I find ways to reduce/eliminate it.
4: 1-Month Emergency Fund
Look at your fixed monthly costs.
Save 1X this amount and keep it in a savings account
Look at your fixed monthly costs.
Save 1X this amount and keep it in a savings account
5: Eliminate High-Interest Debt
Debt turns financial inconveniences into emergencies.
Attack any high-interest debt that you have with everything you've got.
Refinance if possible.
Throw every dollar at it until it’s all gone.
Debt turns financial inconveniences into emergencies.
Attack any high-interest debt that you have with everything you've got.
Refinance if possible.
Throw every dollar at it until it’s all gone.
6: Employer Match
If your employer offers a match on retirement contributions (401k, 403b), contribute enough to capture it all, but nothing more.
Invest it however you'd like (I use index funds for simplicity)
If your employer offers a match on retirement contributions (401k, 403b), contribute enough to capture it all, but nothing more.
Invest it however you'd like (I use index funds for simplicity)
7: Full Emergency Fund
Time to build out a full emergency fund.
How much should you save? That depends on your situation.
Use this table as a guide:
Time to build out a full emergency fund.
How much should you save? That depends on your situation.
Use this table as a guide:
8: Health Savings Account (if applicable)
Do you have access to an HSA?
Max it out!
HSA’s are the only triple-tax-free accounts that exist.
Do you have access to an HSA?
Max it out!
HSA’s are the only triple-tax-free accounts that exist.
9: Individual Retirement Arrangement (IRA)
Next, max out a ROTH or a Traditional IRA.
Which one depends on your tax situation.
If young/low tax bracket, favor ROTH.
If old/high tax bracket, favor Traditional.
Next, max out a ROTH or a Traditional IRA.
Which one depends on your tax situation.
If young/low tax bracket, favor ROTH.
If old/high tax bracket, favor Traditional.
10: Fund Kids’ Education (If applicable)
Want to help pay for your kid's education?
▪️529
▪️Coverdale
▪️UGMA
These are 3 great choices to consider.
Want to help pay for your kid's education?
▪️529
▪️Coverdale
▪️UGMA
These are 3 great choices to consider.
11: Eliminate all non-mortgage debt
Attack and destroy ALL remaining debt (car, student loan).
Keep punching it in the face until its gone.
Attack and destroy ALL remaining debt (car, student loan).
Keep punching it in the face until its gone.
12: Build Wealth
Use any extra money beyond this point to:
▪️ Taxable investing (Stocks/Real Estate)
▪️ Max-out Employer Retirement Accounts
▪️ Irregular Expense Fund (Car/Home Repair)
Mix and match as you see fit.
Use any extra money beyond this point to:
▪️ Taxable investing (Stocks/Real Estate)
▪️ Max-out Employer Retirement Accounts
▪️ Irregular Expense Fund (Car/Home Repair)
Mix and match as you see fit.
13: Mortgage Payoff Fund
Time to punch your mortgage in the face
Option 1 - Add extra monthly payments
Option 2 - Add money to a separate account. Pay off the mortgage in 1 shot once the balance > mortgage.
I prefer option 2, but there's no wrong way to do it
Time to punch your mortgage in the face
Option 1 - Add extra monthly payments
Option 2 - Add money to a separate account. Pay off the mortgage in 1 shot once the balance > mortgage.
I prefer option 2, but there's no wrong way to do it
14: Whatever you want!
If you’ve made it this far, you’re a financial rock star!
▪️Give MORE money to charity?
▪️Luxuries?
▪️Vacations?
Spend any remaining money however you’d like.
If you’ve made it this far, you’re a financial rock star!
▪️Give MORE money to charity?
▪️Luxuries?
▪️Vacations?
Spend any remaining money however you’d like.
I used a Google sheet to track my income, expenses, and net worth each quarter.
Want a copy?
Get it here: brianferoldi.gumroad.com
Want a copy?
Get it here: brianferoldi.gumroad.com
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