Setting up your financial house

Setting up your financial house is about creating financial security for your home.

Create a plan & lay the foundation

1. 
   

   Start with a plan. Any solid house starts with a plan. A plan built on dreams and structure. What do you need? What do you want? What is your timeline?

Take some time to think through these questions. Then we’ll proceed to setting the foundation.

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2. Lay the foundation. Now that you’ve drafted your plan, let’s begin to lay the foundation. First, let’s point out that it takes time to lay each block, so don’t get overwhelmed. Go at your own pace.

For our personal financial house, we have five foundational blocks.

1. We tithe in our home, but if this is not in your plan, then consider giving to your favorite charity. Our personal goal is 10% of each paycheck.

2. Establish a checking account. This is fairly simple, and there are plenty of options. This will be your main account to deposit paychecks and to pay bills. Start at a local bank and speak to a bank representative about your options.

3. While you are at the bank, set up two savings accounts. The first will be used to save for short-term projects, bigger purchases (maybe that new 85″ TV that went on sale!), or if you have overspent your monthly budget. What! We need new tires???

4. The second savings account is for your cash emergency fund. This account is rarely touched other than for deposits. We use a bank savings account so that our money is easily accessible in the case of an emergency. Experts advise saving 3 – 6 months of expenses.

Don’t panic if this seems like a large amount. You’re not doing this all at once. Here are a few good articles to learn more: https://investor.vanguard.com/emergency-fund/amount

https://www.fool.com/the-ascent/banks/emergency-fund-calculator/

5. Lastly, but equally important, is setting up a retirement account. If your employer offers a 401 (k) account or similar and matches your contribution, then contribute at a minimum up to the maximum to obtain your employer’s match. Can we say, “Free Money?" Maybe our lucky number is 10, but this is another area where we put 10% of each paycheck. Time flies, and compound interest is a lovely thing. Check out this link to see more: https://www.investor.gov/additional-resources/information/youth/teachers-classroom-resources/what-compound-interest