Do-It-Yourself Financial Plan Step #1 -Cash & Credit

Cash flow is where you start. Don’t think you have cash flow? Sure you do. Just start by paying yourself first-not after all the bills are paid, but before. Start with taking 10% of your salary and divide by 12 months.  That is your monthly savings amount. Open up a savings account and request a direct deposit from your paycheck to your savings account.

Congratulations! You have made the first step in creating wealth- saving. A savings account will give you a cushion. Don’t worry if you are only getting a small amount of interest on the money. The point is to have some funds to rely on when the roof needs repair or the car breaks down. That’s what this money is for- short term expenditures and surprises that come up in life.

Also a good savings account will prevent you from dipping into investment funds which should be held for the long term for maximum value. Many good investment plans go sour when they are dipped into for emergency cash. Keep them separated, and you will keep your investments intact and you are on your way to real wealth.

I have written some posts also about having and maintaining good credit, too. After you have money going monthly into a savings account and your credit score is 720 or better, then you are ready for step #2.

Congratulations! You have made the first step in creating wealth- a savings account and good credit.

    About the author

    Fern Alix LaRocca CFP® EA

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