March 19, 2014 in 3rd Guide - Portfolio Building

5 Key finance checks

5 Key personal finance checks for debt and funding priorities and actions help manage financial decisions. Managing debt and funding builds security, wealth and retirement comfort.

Effective Investing & Finance Research, Lesson 11, teaches the importance of knowing and establishing your debt and funding priorities. Links at the end guide you to related content if you want to learn more.

What’s in this lesson for me?

These key personal finance checks help you establish your debt and funding priorities to manage your financial decisions. That helps you take action to build financial security and wealth.

Personal Finance Housekeeping

To get established financially requires some personal housekeeping. Begin by eliminating bad debt and keeping only debt used to fund appreciating assets. Then established a 6 month emergency fund and set your income up to always pay yourself first.

Anyone seeking financial security, independence or wanting to control of their future needs their financial house in order. Start where you are and set about making things good for yourself. All actions you take to get your personal finances in order helps build your future prosperity.

Use the 5 Key Personal Finance Checks serve as a starting point. The very best time to start is today!

5 Key Personal Finance Checks:

1. Pay off bad debt

Pay and avoid high cost credit card debt

2. Pay down debt

Don't buy depreciating assets (car) with debt

3. Keep only good debt

Appreciating assets (house) grow in value

1. 4. Emergency Fund
2. 6 month minimum

5. Pay yourself 1st

Set aside 10% from every paycheck

Acting on these 5 Key Personal Finance Checks. That starts you in the right direction. It allows you to build a solid financial base. Once you check all 5 keys off your to do list, you are well positioned to build your financial future and begin investing.

Credit Card Debt

Credit card debt ranks as the worst kind of debt. It is very costly and prevents you from building a solid financial future. Think of any credit card debt as an opportunity to have a high guaranteed return. By paying it off the high interest charged on credit cards stays in your pocket; right where you want it!

Bad Debt

Pay off all bad debt. Bad debt is any borrowing to buy an asset that goes down in value. That means as you continually pay more interest on your debt, the asset itself becomes steadily worth less. Paying all that interest is like taking money away from your future self.

Pay off bad debt as fast as you can. Instead keep that money for yourself by saving before purchasing any depreciating asset. That lets you avoid all the costs of bad debt purchases.

Good Debt

Good debt, or borrowed money used to buy excellent assets that go up in value. In most circumstances, house mortgages are good debt. As long as the mortgage is not over levered or overdone, and the household income can comfortably support the mortgage payments, it is good debt.

Emergency Fund

Once debt is under control, set about saving cash that totals 6 months of living expenses. Put it in a savings account and keep it there. It is for emergencies only. A shoe sale or new sports gear does not count as an emergency! Keep the emergency fund readily available and hope you never have to draw upon it. The security of having an emergency fund helps you calmly make better personal and financial decisions. Pat yourself on the back once you save the 6 month emergency fund. Just be sure to leave it alone - except in an emergency.

Saving - Pay Yourself First

Pay yourself first, set aside 10% from each paycheck and give yourself a good way to build a prosperous future.

The last key, saving. This is the second part of the one - two punch of wealth building. One pay debt, two save! Set your first savings target at 10% of your income. Later work that up to 15%. Make savings your first payment from every pay period. Pay yourself first is the difference between financial comfort and financial anxiety. There are endless variations of pay yourself first. Just begin by committing to get the cash in a savings account. In other discussions we cover many opportunities to get the money to work. First accumulate some savings. Then we discuss putting it to work.

Why this lesson matters

Personal finance housekeeping using the 5 key personal finance checks gives you a list to establish debt and funding priorities to manage financial decisions. Taking action builds financial security and wealth which can put money into your pockets.

Key take aways from lesson 11, 5 Key personal finance checks, includes:

5 Key personal finance checks for debt and funding priorities and actions help manage financial decisions. Managing debt and funding builds security, wealth and retirement comfort.

Pay off bad debt.
Pay down debt.
Keep only good debt (buying appreciating assets).
Establish a 6 month minimum emergency fund.
Pay yourself first - set aside at least 10% from each paycheck.

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Effective Investing & Finance Research:

Introducing Effective Investing & Finance Research Lesson 1

Investor homework grows profit Lesson 2

Find money making stocks Lesson 3

Money making stock issues Lesson 4

Using watch list holds Lesson 5

Oprah got it right - Aristotle got it wrong Lesson 6

Investopedia finance and investing education Lesson 7

10 Point investor checklist Lesson 8

Investing confidence, taxes and learning Lesson 9

Media exposes advisor incompetence Lesson 10

5 Key finance checks Lesson 11

Next suggested course: Managing Investment Market Risks

Have a prosperous investor day! Bryan White Top Investor whitetop@WhiteTopInvestor.com WhiteTopInvestor.com Let’s connect, follow me; Twitter LinkedIn Facebook Image courtesy FreeDigitalPhotos.net

About the author

Bryan Kelly

Bryan Kelly made the White Top Investor mission, investing for all, by sharing his investment knowledge learned in decades of stock market investing. His knowledge and experience are shared in 5 Ultimate Investing Success Guides. White Top Investor lessons teach new investors how to make money work investing in the stock market. Lessons guide beginners to investing success, individual freedom, personal empowerment, and financial independence. For more see the White Top Investor About page.

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