Getting Started

Budgeting is necessary in order to manage your way to a healthy financial standing and eventually wealth. Once a paycheck is received it should be divided to cover you and your families immediate needs, then retirement, emergency savings fund, and then investments, and lastly, you and your families lifestyle. Bills should never cost more than 50% of your net income and every effort should be made to reduce this.

A retirement account (Roth IRA or 401K) should be established as early as possible. This should be no less than 5% of your net pay. Take advantage of the 401K match if applicable, max out your Roth IRA, max out your 401K, invest in a brokerage account. An Emergency Savings Fund should be no more than 25% of your net income and be established and held in a High Yield Savings Account. This amount should cover bills for three months with stable income or six months with irregular income. Once the Emergency Savings Fund is fulfilled, it will be time to invest in other short-term savings goals or other investments. As your net income or bills increase, so should your Emergency Savings Fund.

Lastly, the final 20% of your net income should be spent however you choose. However, keep in mind, your circumstances and motivation to achieve financial success, could potentially mean decreasing or stopping addictive interests. This money, in turn, should be used to pay toward loans, credit cards, or other investments. This is also where you would start and fund a home-based business until business income is achieved. It is best to have a financial balance of investment and lifestyle choices that support your mental and physical health. This type of mindset requires discipline and has the potential to result in financial independence.