Where To Start: The 1st 5 Steps Towards Your Financial Future

This article was originally published by Stacy Ployhar with 2020 Financial Planning LLC.

The day has arrived: You have decided to take the next step and engage with your financial life. Congratulations! While many people think about ‘a portfolio’ or ‘assets’ as being the starting point of a financial life, they are not. There are 5 steps that precede those. You may have already accomplished some of them. Here they are:

  1. Debt: Do you know what your debt is, what your interest rates are, what the terms are, and the payoff schedules? This is for everything from student loans to auto loans to credit cards. Hint: The most important part of debt is how much it is costing you. That is determined by the interest rate of each form of debt.
  2. Spending Plan: This is commonly called a budget. I like calling it a Spending Plan though, because that sounds more complete. Also because ‘budget’ sounds too much like ‘diet’, which connotes the lack of things we enjoy. Knowing all the moving parts to your spending is core to this.
  3. Net Worth: How much do you own and how much do you owe? Those are the 2 sides of a balance sheet, which is how net worth is calculated.
  4. Credit Score: What is your credit score and do you annually review it? You can request a free credit report each year. Review it to make sure the information is accurate and to fix any errors on it.
  5. Emergency Cash: Sometimes called ‘Emergency Savings’. This is step 5 for a reason. After conducting steps 1 through 4, you are now ready to focus on saving money. It doesn’t matter how small the amount is that you start with. The key is to start and for it to become a habit.

If you have completed each of these ‘everyday finance’ steps, congratulations!

You are now ready to move forward with thinking about setting financial goals (the ‘necessary’ ones and the ‘fun’ ones) and savings towards your future.


Ready to Get Started?

Contact us today to get started on the process. If you have any questions we will be more than happy to advise.

Posted in

Western WA FAN

Get in Touch

If you have a question or would like to discuss our products or services feel free to get in touch.