The Four Levels of Fast Start
Some of you were brought up in families that consistently discussed investing, debt, and spending.
Others wouldn’t know the difference between Dave Ramsey and Dave and Busters.
No matter how you were raised, it’s now up to you to take ownership of your finances.
So, today I’m introducing the Four Levels of Fast Start.
See where you fall!
Level 1: Financial Awareness
You are just starting out.
You want to start laying the groundwork for a healthy financial future, but know it may be a long journey.
If this is you, welcome.
You are the ideal person to be reading this.
Here is exactly what you need to complete Level 1:
- Track your expenses for 3-months using tools like Copilot, Monarch, YNAB, or an Excel Sheet
- Write Out by hand all of your debts with the Debt Name, Amount You Owe, and Interest Rate of Each. Then, make a plan to pay them off (Using Debt Snowball or Debt Avalanche Method)
- Put $1,000 into a savings account for unexpected expenses. Unsure where to get $1,000?
- Transfer it from your checking account all at once if you’ve got it
- Or $250/month for 4 months
- Or $100/ month for 10 months
- Contact your HR and start contributing to a 401(k) up to what your employer matches. This will take about an hour, but is worth your time.
- Recommended Fast Start Readings:
By the end of Level 1, you will be contributing to a 401(k), have a plan for debt, and have an idea of where your money is going.
Nice!
Level 2: Financial Stability
Alright, you've covered the basics and are now looking to start making improvements.
Here is what you need to complete Level 2:
- Budget Breakdown: Save 10% | Spend 88% | Give 2%
- Completely pay off high-interest debt (Credit Cards, etc.)
- Increase Your Emergency Fund to cover 3 months of expenses
- Open a Health Savings Account if you have access to one
- Consider Long-Term Disability Insurance
- Start saving 10% of your income each month towards retirement in the following order:
- Recommended Fast Start Readings:
Getting out of high-interest debt is a #majorkey to financial success. By the end of level 2, you’ll be well on your way to a successful retirement and covered in case of emergencies.
Onward…
Level 3: Wealth Building
Welcome to Level 3. Get past this level and you will be in a position few ever reach.
Here's what it takes:
- Budget Breakdown: Save 20% | Spend 70% | Give 10%
- Save 15% towards Retirement (same order as level 2)
- Save an additional 5-10% of income into a Brokerage Account
- Create a Will and Power of Attorney at Freewill.com (Yes it's actually free). Then, assign beneficiaries on your bank and investment accounts.
- Annual Meeting with Certified Financial Planner and CPA to review long-term goals like:
- Family Planning
- Deciding if Home Ownership is Right for You
- Changing Careers
- Recommended Fast Start Readings:
Level 3 will take some discipline and planning. Our save rate is growing along with our giving rate.
We’re also spending more time on our finances by meeting with a professional.
Athletes spend time in the gym.
Doctors spend time in school.
We need to spend time on our money.
Level 4: Financial Mastery
Level 4 is maxing out all that is available to the average American.
Are there more “advanced” things you can do with your money?
Absolutely.
Would you be in a phenomenal position if you stopped here?
Absolutely.
Here is What You Need to Complete Level 4:
- Budget Breakdown: Save 25% | Spend 65% | Give 10%+
- Max Out All Tax-Advantaged Accounts: 401(k) Match → HSA → IRA → 401(k) → Mega-Backdoor IRA
- Regularly investing in your Brokerage Account
- Optimize Tax strategies with a CPA including Tax-Loss Harvesting, Creating Trusts, Real Estate Deductions, etc.
- To maximize your giving, consider a Donor-Advised-Fund
So, which level are you? Hopefully this gives you a clear picture of where you are and where you can start improving.
Want help getting to the next level?
Check out my 1:1 Fast Start Sessions below!
Got ideas on how to improve the levels?
Reply to this email and let me know - I’m eager to tweak this over the coming months.
