So you’re new here, huh? Welcome! We’re glad you found us.
We know that personal finances can be intimidating. It’s our goal to make money more approachable so that you can get some positive momentum and create long-lasting change in your life. Let’s get you pointed in the right direction.
Start by listening to our episode on the 7 Money Gears. This is helpful if you’re not sure what stage of the personal-finance journey you are on. Mile markers are helpful when you’re on a road trip. The same is true with your personal finances.
Money Gear #1 – Save up $2,467 for a basic emergency fund
The importance of an emergency fund can’t be overstated and it all starts with having cash in the bank. We recommend amassing at least $2,467 in liquid savings. That’s a pretty specific number, right!? But economists have found that to be a helpful baseline to shoot for when you’re working on getting that e-fund up to snuff.
Money Gear #2 – Snag the company match in your 401k or other workplace retirement account
Quite a few employers offer a matching contribution. It’s a nice incentive that can help you build up savings for your future much more quickly. Some employers will match 50% of what you contribute and others offer a dollar for dollar match until you hit a specific cap. Don’t leave that free money on the table!
Money Gear #3 – Pay off high-interest debt as quickly as possible
Having boatloads of debt is a surefire way to not make any progress with your personal finances. You’re taking the money you earned today to pay for stuff you bought in the past. It’s ok to take on debt for certain things. But most Americans have too much of it.
And transferring your balance to a 0% credit card can be helpful if you also change your approach to using that card at the same time.
Money Gear #4 – Fully fund your emergency fund!
$2,467 is a nice chunk of change and can get you through a lot of potential financial emergencies. But when you’ve shifted into money gear #4 you’re going to want to put the pedal to the metal on savings and amass 3-6 months of living expenses. This provides even more breathing room in your life and gives you meaningful options.
And please, make sure that your money isn’t with one of the big banks like Wells Fargo. Opt instead for a bank that eliminates fees and pays a solid interest rate. We recommend going with Ally, Discover, or CIT.
Money Gear #5 – Invest in tax-sheltered retirement accounts
The basic personal finance building blocks of having a cash cushion and paying off high-interest rate debt are more important than investing (except for that employer match of course). But once you’ve got those licked, it’s time to start growing the money you’ve earned.
What’s the best way to do that? We love retirement accounts that offer helpful tax advantages. So check out our episode on the beauty of the Roth IRA and the one where we discussed HSA’s which are highly underrated and possibly the best retirement account in existence.
But what funds do I choose!? We had JL Collins on the podcast to discuss that on episode 175.
Once you are investing 15% of your income you’ll be ready to shift into gear #6, which is…
Money Gear #6 – Pay off lower-interest rate debt
You’ve already gotten the most crummy debts out of your life at this point. You’ve got cash in the bank and you are successfully investing quite a bit of your take-home pay. Now it’s time to focus on paying down other debts like your student loans!
Eliminating these smaller debts will mean fewer bills in your life and greater simplicity overall.
Money Gear #7 – Pursue your other big saving and investing goals!
Money gear #7 is like cruising downhill on an e-bike. There’s no stopping you now! You can max out your retirement funds or start giving massive amounts of your money away to non-profits that are serving your local community or the world at large. This is also the time to start saving for your child’s future college education if you so choose.
But if you instead want to go on a baller trip to Bali or prefer to start your own business, now’s the time to do that!
You can even attempt to join the FIRE crowd and decide to quit work earlier than most. The world is your oyster when you’re cruising along in money gear #7!
We hope that this resource is helpful in kicking off your personal finance journey. Don’t forget to subscribe to the podcast while you’re here. And if you’re looking for community support, the HTM Facebook group is a vibrant place full of people all along the money gear spectrum helping each other out.