Build Your Financial Foundation
If you've ever felt that financial advice seems more complicated than helpful, you're definitely not alone. Managing your money doesn't need to be confusing or overwhelming. By breaking things down into clear, manageable steps, you can build a solid foundation without needing to be a financial expert.
This guild was made with you in mind to help show you where to begin and how you can build momentum to reach your financial goals. This is NOT a get rich quick plan. This is designed to help give you actionable steps that you can take to achieve long-term stability.
Step 1: Cover Immediate Essentials (Basic Safety Net)
First things first, start by building a small emergency cushion. Life has a way of throwing little surprises at us—a car repair, an urgent medical co-pay, or an appliance breakdown. Instead of reaching for a credit card, aim to have a small buffer of $500 to cover these expenses. This is just the starting point and will help you avoid taking on additional debt that sets you back even further for the everyday bumps in the road.
Goal: Save $500 and build a new habit in the process.
Why It Matters: A small emergency fund provides a bit of breathing room, giving you time to work on the next steps without being derailed by unexpected expenses. Each year multiple surveys find that nearly half of Americans have less than $1,000 in savings. With numbers like that, you can see this is no easy task for the average American.
Action Plan: If you don't already have a savings account, check with your Bank and open one. There will likely be a small minimum balance to open one that you'll likely have to maintain. If you are paid bi-weekly, you will receive 26 paychecks each year. Your goal for each paycheck should be to set aside at minimum, $20 in your new savings account. Within 1 year you will have met this goal: 26 x $20.00 = $520. If you find along the way that you're able to save more, aim for $1,000 saved and you'll be doing better than half of Americans by next year. If you have an emergency along the way, don't feel bad using the money you have saved. That's why it's there! This step is about building a new habit.
Step 2: Capture Employer Matching (Free Money)
Now that you've built your savings habit and you have a small emergency fund, it's time to start looking ahead years down the line. If your job offers a retirement plan with matching contributions, this is the time to take advantage of it. Employer matching is essentially free money—every dollar your employer matches is an instant return on your investment. Missing out on this is like leaving part of your paycheck on the table.
Goal: Check the details of your employer's retirement offerings and see if they offer any form of matching. For instance, they may match a certain % of your contributions. If they do and you aren't contributing to your employer-sponsored retirement plan, your goal is to talk with your HR representative and see what you need to do to begin.
Action Plan: Build on your savings habit that you created in Step 1 and either shift a portion of your paycheck savings to this retirement account or if you're able to, contribute enough to maximize the employer contributions. Again, the main focus here is to create another new habit, even if that means you're only able to contribute the minimum that's required. Crossing the hurdle to open the account should be considered a win. You will be amazed what even the smallest amounts can grow to with Compound Interest.