The Must-Have 3-Step Checklist for a Solid Financial Foundation

The Must-Have Checklist for a Solid Financial Foundation

There is a ton of information about financial planning out in the world. People talk about dozens of different investment strategies, hundreds of “rules”, ratios, and optimization methods. This article will narrow down this over-complicated subject into three main bullets that are great steps to take before embarking into the complexities of personal finance.

  1. Make More $ Than We Spend
  2. Having Enough Insurance
  3. Have Cash Savings Before Investing

These three things are more than enough to live a simple life. Will retirement be guaranteed? No. Will I wake up to a million-dollar investment portfolio one day? No. We can worry about building wealth and retiring another day, or another year. Today we keep it simple with great first steps.

Make More $ Than We Spend

If I make $1,000 per week, I need to spend less than that on per week. It’s really that simple. Many ‘professionals’ say that credit cards are bad, or debt is bad. In my opinion the main reason ‘anti-debt’ is so commonly focused on is because most of us spend more money than we make. The easiest way to avoid spending more money than we make, is to not use debt.

It’s extremely easy to spend more money than we earn. Every influencer and commercial encourage us to buy the most expensive stuff we can “afford the payments on”. All the interest payments, the credit card bills, the fees, the student loans, and the list never ends. I’m even starting to see companies offer payments schedules for delivery pizza and groceries. Spending less than I make is the only thing that allows me to build wealth and not stress about money.

I’ve always been a fan of keeping it simple. Avoiding debt is the easiest way I’ve found to follow this strategy. Having a bunch of payments and seeing my paycheck disappear as soon as I’m paid is not the life I’d like to live.

Please feel free to reach out for a free conversation if you’d like to come up with a plan to start working toward removing debt, building wealth, or both! Even just a second opinion on methods to “spend less than we make”. I’m here to help.

Have Enough Insurance

“Enough” is relative. For myself, I need life insurance to protect my family in case something happens to me. We need health insurance to protect our family from a major health event. Car insurance protects our investments from a lawsuit and from needing to sell assets to buy a new car.

All insurance does is protect us from major loss. It specifically protects us from a financial disaster due to a catastrophic circumstance.

Happens Rarely + Expensive to pay for = Might want insurance.

If an event in my life would bankrupt me and cause me to become homeless, that’s usually when I know insurance is essential. i.e., House fire, house flood, death, injury, etc.

Each person has their own insurance needs, based on age, what they own, how many people rely on them, if they have a business, or even how wealthy they are. Some people can survive without any insurance.

Simply put, insurance reduces risk. The more insurance we have, the less risk we have.

The more insurance we have the more monthly insurance payments we will have.

Finding a good balance is important.

If you would like to have a free call to discuss insurance and the different options, you have. You can email me at

Emergency fund

I would not invest without first having an emergency fund.

An emergency fund is just having some money in a bank account. This money is not touched unless there is an emergency. About 3 months of income would be a large emergency fund (3-6 months of expenses is a typical recommendation).   

Here’s an example of why to have an emergency fund. Let’s say I invested $10,000 into the stock market. Let’s then say that the market goes down 10% because the economy is slow for that year. Now my roof needs replaced because it got torn to pieces by the weather. It costs $10,000 (in 2022 the market dipped over 20% at one point) to replaced. Now I have to sell my investment for $9000 and figure out where to get the extra $1000 from.

That would leave me $1000 poorer, and without any investments for my future.

I personally do not invest unless I’m confident I will not need that money for over 10 years. If I think I’ll need the money sooner than that, there are good alternatives to make a little extra cash (like government treasuries (bonds) and CD accounts at your local bank).

Emergency funds are useful for people who own houses, cars, have a family, potentially could be laid off some day, or any other factor that is ‘unknown’ for our futures. *Cough, cough* THAT IS EVERYONE!


Those are the 3 things I believe are very good steps to have a solid financial foundation. If I were to start over, these would be my first three steps.

Every person has vastly different financial needs. I would recommend speaking to a professional before taking any drastic money moves in your own life.

Published by Christal

I write to share my experience of going from $0 to a millionaire and what I am learning along the way. Working toward that goal one day at a time and sharing the tips and tricks I'm trying.

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