These are the 12 Steps we use in planning:
1. Live on less than you earn. This is rule #1. Full stop. Nothing can happen beyond this until it’s upheld through lifestyle and budgeting.
2. Make sure you have enough insurance coverage for all needs.
3. Make sure you can cover basic deductibles.
4. Set aside the first 1 month of emergency cash reserves, while making minimum payments to high-interest debt.
5. Max out your employer match. You won’t get the opportunity again for this “free” money.
6. Continue setting aside cash reserves until you reach 3-6 months, depending on the career you’re in and how long you would anticipate needing to find a replacement position.
7. Increase the amount you are paying toward your high-interest debt, and accelerate payoff.
8. Max out your Roth IRA and HSA contributions.
9. Shift focus to hyper-accumulation of wealth - this can be done through maxing your 401k to create a mega-backdoor Roth scenario, and can also include using life insurance for wealth building and intergenerational wealth transfer.
10. Focus on prepaid future expenses, such as college planning.
11. Focus on paying off low-interest debt, such as your student loans and primary mortgage.
12. Diversify into other “real” assets, or fund a future business.