Compound interest is the eighth wonder of the world.

Learn how small changes today move the mountains of tomorrow.

In a digital world you can no longer see your physical money. You rarely have cash in your pocket, because your money is just some number on a screen. You can make a thousand dollar purchase almost instantly with your watch! It is clear that going broke has become much easier than growing rich. The odds have been stacked against you. Learn how to tip the scales in your favor. Make the dollar work for you instead of you for the dollar. Learn how everything is connected because Financial Literacy is no longer a nice-to-have. It is a requirement!

Personal Finance – Keys to Success

1. Define your dream

You will not get far if you don’t know where you are going – so dream big! Define your desired future as clearly as possible and as detailed as possible. Do you want to pay off a mortgage? Do you want to retire early? How early? Do you want a convertible sports car when you retire? Put it all on the list.

2. Define your starting point

Assess your financial situation. This is where you need to go through your finances with a fine-tooth comb. Write out all of your current and future financial obligations in order to determine your net worth. This will mark your starting point and the beginning of your journey of financial goal crushing.

3. Build a bridge

Personal finance is basic math. Subtract the current state from future dream state and whatever is left is the gap needed to get you to your dream state. This is where the tires meet the road. Review your spending and expenses and develop a path to achieve your goals – yes, it is easier said than done – but it is doable and you can do it too!

4. Contingency plan – level one

Life happens. Good things and bad things often happen unexpectedly. It’s easy to plan for good things, but we need to plan for the unforeseeable risks to make sure they don’t trip us up. One of the primary actions is to build up an emergency fund. $1,000 is a great starting goal. It will help cover any emergency car repairs, unexpected bills, or other surprises without impacting your journey.

5. Pay off bad debt

Debt comes in various forms, some debt is good, while some not so much. Bad debt is usually classified as high interest loans used to purchase items that lose value over time. It includes credit card debt, car debt, various financing of larger purchases (i.e. furniture, electronics), payday loan debt, etc. The high interest rate leads to a slow cashflow leak that could be used to build wealth for you but instead is building wealth for the lenders. So let’s patch up this leak and redirect it towards building your wealth. An effective way to pay off debts is using the snowball method.

6. Maximize income and investments

Maximizing your income may seem too obvious to even discuss it. However, many companies offer a slew of benefits that employees don’t even know about. 401k contribution matching, health insurance, HSA accounts, gym memberships, daycare subsidies, continued education financing are all examples of benefits that companies may offer. Speak to your manager and HR partner to get an idea of what is available to you and what you could take advantage of. After all, why would you spend money on something that you can get for free?

7. Complete contingency plan

Now that you have gotten rid of that pesky bad debt and begun to build wealth, you need to complete your contingency plan. It needs to be able to alleviate bigger challenges such as loss of employment, family planning, or taking time off to advance your education.

8. Develop a lifetime plan

Now that you have begun to build wealth, a lifetime plan is needed to help plan and anticipate any big future impacts to your financials. Those include events like buying a house, having kids, education, retirement, luxury cars, vacation homes, and whatever else your dreams entail. Having a solid plan of attack will allow you to achieve the goals you set for yourself.

9. Review and adjust

At this point you can rest easy. You have done the hard work. You learned a lot along the way and developed good habits. Now you can sit back and relax but you cannot forget about your finances. Just like New Year’s resolutions, execution is the hardest part. So take the time every so often to review where you stand and assess if any changes need to be made. Has something changed in your life for the better or for worse? Celebrate the wins and learn from the losses. With this mindset you WILL achieve financial freedom!