When you want clarity and confidence in your finances, where do you start?
You have access to an infinite number of articles, blogs, podcasts, etc. that share their opinion on that question. How do you know those opinions will lead to success for you specifically?
Our path will lead to clarity and confidence. It is simple, yet profound. It does apply to you. It also takes dedication and determination. If you are ready to follow it without deviation, here you go:
Step 1: PROTECT - You are your biggest asset.
Therefore, protect yourself. The realms to protect are property, medical, legal, and estate. There is a lot to get wrong here, so do not cut corners. Spend spend some adequate time completing this.
i.e) Having disability insurance via your employer is good, but have you actually read what it covers you for? It is likely you wouldn't be okay with it if you read your benefits summary
Ask, "If something unexpected happens to me, will my financial life be the same as before when my current protections kick in?"
if you have voices telling you otherwise then they are likely selling you some investments that gets such a great rate of return that you "don't need to save". That is dangerous and very rarely ends how you want it to. Plus, when you are a good saver your future success is in your control, and not some investment that you have no control over.
How much should you be saving: 20% of you gross income, and when you get raises, split the raises between savings and living expenses (don't just spend it all).
Step 2: SAVE - You, and you alone, control your success
That 20% savings should be first and foremost building liquid assets.
How much? 50% of one year's salary.
What is Liquid? Cash, Checking and Savings, Non-qualified (not IRA or 401k) Brokerage/Advisory Accounts
What is Not Liquid? 401k, IRA, Real Estate. These are not bad vehicles of growth, but resist putting into them until you have 50% of one year's salary in liquid places.
Step 3: BUILD LIQUIDITY - Liquidity provides you freedom, opportunities, breathing room, and flexibility.
However, pay it off AFTER you have completed steps 1-3.
Why? If you address debt first, then you are so much more prone to stay in debt when life throws you curveballs. Therefore, make minimum payments until steps 1-3 are complete. Then pay off your highest interest loan with larger payment(s) and apply that monthly payment to your next highest interest loan until that is paid off. Keep that going until you are debt free!