The Foundation Phase

Phase I

Many individuals often feel like crucial aspects of their financial lives are slipping through the cracks. How does this happen, and what can you do about it? You know that planning your financial future, saving for retirement, customizing an estate plan, and securing adequate insurance coverage are essential steps. However, with such a long to-do list, it's easy to feel overwhelmed and unsure of where to begin. Fortunately, there’s a systematic approach to building and enhancing your financial health—one that ensures no detail is overlooked, from investment strategies to long-term planning. By following our step-by-step process, you can take control of your financial future with confidence.

5 Steps

Here is an overview of the five steps in building a solid foundation

Next Phase - Accumulating Wealth

Step 1

Create a Budget & Save $1,000

Create a realistic budget that you will actually implement. Understand that it will take time to make a budget that works month to month, and don’t become discouraged when you can’t get it right the first time around. Just make a budget!

In addition, be sure to save up $1,000 in cash. Should you have a small emergency, $1,000 is typically enough to cover the expense. Later, you’ll grow your emergency fund to three to six months of living expenses.

It’s important to take actual cash out of the bank for this step. Keep it in a safe place at your house and pledge to only touch it when emergencies strike.

Step 2

Appropriate Insurance Policies

Insurance is designed to help you pay for expenses that you can’t afford. It protects you and your family from emergencies larger than your emergency fund. In addition, it can protect your future income.

Some types of insurance policies you may need include:

Homeowners/Renters
Auto
Life
Health
Disability
Umbrella

Need insurance? Let us help you get the insurance appropriate for you and your family.

Step 3

Personalize Your Estate Plan

Don’t die without a living trust. The last thing you want is for the state to decide where your assets go and when, who will have custody over your minor children, and whether your estate will be made public.

Also, get a living will. A living will can make your desires known regarding difficult medical situations in which you may not be able to express your wishes.

These documents are not just for the wealthy. They’re for everyone!

Don’t have a living trust or living will yet? Let us help you get an estate plan in place.

Step 4

Pay off All Consumer Debt

Now is the time to tackle all your personal debt—excluding any mortgages. This includes credit card debt, auto loans, school loans, personal and family loans, and any other non-mortgage obligations. You might be wondering why you shouldn’t start paying off your mortgage at this stage. That’s a great question, and there are two key reasons.

First, the next step in the Foundation Phase involves building your full emergency fund—a critical safety net for long-term financial stability. Second, contrary to popular belief, paying off your mortgage early might not always be the best strategy. In fact, there are scenarios where holding onto your mortgage can be more advantageous. To understand this better, check out our adapted story, The Tale of Two Couples.

To pay down your debt effectively, consider using the debt snowball method, which allows you to achieve quick wins by focusing on smaller debts first. As you move forward, it’s crucial to avoid accumulating any new debt, so you don’t undo all the hard work you’ve accomplished. If you’re feeling stuck, don’t hesitate to seek help from one of our excellent financial planners. They can guide you toward a clear path out of debt and into financial freedom.

Step 5

Save 6 Months Emergency Fund

No job is completely safe. Good health is temporary. Emergencies happen!

Having three to six months of living expenses in an emergency fund will come in handy when the inevitable hits. Emergencies are more of a question of when, not if.

If you live in a two-income household where each spouse works for a different employer, both incomes are similar, and both you and your spouse work for companies owned by other people, save three months of living expenses. Otherwise, save six months of living expenses in an emergency fund.

Make sure you save your money in a liquid savings account. Don’t get fancy with the money you have here. If you don’t have easy access to your emergency fund (like in the case of storing it in a CD, for example), the emergency fund might not be able to serve its purpose during an emergency.

Unique situation? Find out what our top-notch financial planners recommend you save.