The Cheat Sheet

With all this mix of financial products and tools, in what order should one go about taking care of business? The best answer is that it depends, and it’s up to you. But, one way, PURELY FOR EDUCATIONAL ILLUSTRATIVE PURPOSES (I’m not providing financial advice here), is to address things in the following order:

  1. Make sure you have a solid credit union or bank that treats you well and you’ve got some emergency savings.
  2. Then, make sure you’ve:
    1. Started paying off debt (especially credit card debt)
    2. Gotten sufficient insurance coverage (life, disability, and anything that’s legally mandated but that you haven’t gotten already)
  3. Invest in retirement. Start with getting free money from your employer. Then get the best tax arrangement (Roth IRA), and then get the less-best tax arrangement, back at your employer.
    1. Start with making sure that if your employer has ANY matching, you’re contributing up to the maximum amount that will be matched. This might be 3% or 5% or something else, but it’s free, so grab it.
    2. Open a Roth IRA and start putting in as much as you can up to the maximum amount ($6,000 for those of us under age 50, as of 2020, which equals $500/mo)
    3. Make sure your spouse or partner does the same.
    4. Then, once your Roth IRA is being fully funded, go BACK to your employer’s retirement plan, and top that off with up to $19,500 in savings (as of 2020) per year.
  4. Then, depending on your values and priorities, address any of the following:
    • Save for your children’s higher education. Using a 529 account is most common.
    • Invest your money in other stuff so it’ll grow and can help make the community grow too, such as starting or supporting a local social enterprise.

This book is a work in progress and we’ll all benefit from your input and collaboration. In the “Leave a Reply” below, please post examples, comments, questions, and needed edits. By posting, you grant permission for inclusion of any content to become part of the book, now or in the future, in whatever form it may take. I’ll give attributions to the extent possible. I know sharing about our financial lives can be sensitive, so if you want to share anonymously, please use the contact form instead and I’ll honor your request.

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