Financial Mastery, Made Simple

As a personal finance coach on LifeSpace, people ask me for advice on personal finance, investing, home buying and other important financial matters. I am happy to provide both my own experiences and extensive research that I have performed over the years.

Although I don't claim to be a financial expert, I do have experience in many areas of finance including as an entrepreneur taking a company from concept through sale and as personal investor, managing a portfolio for over 16 years through good and bad markets.

The most common question I get is either "how do I get started", or "what should I do next". This led me to establish what I consider a proper hierarchy of financial actions that the "typical" person can reference when deciding how to use excess cash. I say "typical" because I am obviously not aware of your personal situation and consulting a financial planner to review your personal situation is always advised and appropriate.

With that said, there are some basic steps that anyone and everyone should do to establish financial sanity and security. Over the next several weeks, we will explore this hierarchy, discussing a different topic each week. You will agree with some and re-prioritize others. And that is a great thing to do given your own situation.

So here is what I consider to be the proper hierarchy for financial mastery:

1. Generate a Budget (Understand Your Situation) 
2. Get Proper Insurance (Family Security)
3. Fund Retirement Accounts (Tax Deductions)
4. Reduce Debt (Save Interest)
5. Tighten Expenses and Save Cash (Save Money)
6. Find a better Job (Earn More) 

And after accomplishing the Financial Mastery basics, the following are advanced concepts we will expand on in a future post:

7. Buy a home (Build a Future)
8. Refinance my home to reduce payments
9. Start a side business (Earn More)
10. Buy an Investment Property (Passive Income)
11. Build a Stock Portfolio (Capital Gains/Dividends)
12. Utilize Options in Investment (Insurance and Leverage)
13. Increase my Passive Income (Accelerate Retirement)

In general, it is recommended that you take this on in order, building up your financial situation with each success. In other words, do item #1 before you take on #2 and especially before you look at #9, 10 or beyond.

In subsequent LifeSpace Minutes, we will feature and dissect each item individually and will provide a template to make it easier to take on the featured item.