How to achieve financial security

The financial choices you make and habits you develop will have a big impact on your life. Working through this list of five steps will bring you to a place of financial security.

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Step one: Understand your cash flow

  • Write down your monthly take-home pay.

  • Write down a list of your fixed expenses: mortgage or rent, debt payments, insurances, cell phone bills, etc.

  • Subtract your fixed expenses from your monthly take-home pay. Let's call the amount you have left your "budget." Write down your budget amount.

  • Then use your budget wisely to cover variable expenses (e.g. food, gas, utilities) and discretionary spending (e.g. clothes, entertainment).

  • Here's a short video that explains cash flow.

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Step two: Establish an emergency fund

  • It'll take some time, but your first priority should be to establish an emergency fund.

  • Aim to save $1,000 from your "budget."

  • Set aside $25, $50, or $100 whenever you can.

  • In the event of a minor emergency, a $1,000 is usually enough to right the ship without taking on any new debts.

  • You can always add to your emergency fund later.

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Step three: Maximize free money

  • After your emergency fund is in place - your next objective is to start saving for retirement.

  • If your employer offers a 401(k) match, make sure you're contributing enough to receive the full benefit of their match.

  • Otherwise, you're leaving free money on the table.

  • Note: contributing to your 401(k) will reduce your take-home pay. This will impact your "budget."

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Step four: Prioritize your debts

  • Write down a list of all of your debts.

  • For each debt, write down the number of payments remaining and the interest rate.

  • If you have the money to make an extra payment, make sure its on the loan with the highest interest rate or the fewest payments remaining.

  • Each of these repayment strategies has its own merits.

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Step five: Double down

  • Whenever your income increases or your expenses decrease - don't blow this money!

  • Double down on the good money habits you've developed.

  • Put more money into your emergency fund.

  • Increase your 401(k) contribution.

  • Make extra loan payments to reduce your debt.

  • This discipline will pay off in the long run.

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Open an Account
Reaching your savings goals starts with opening an account.
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