April 1, 2019 // 6 min read
Let’s face it, personal finance is a subject we typically try to avoid. And that’s a problem. A big one. Every day Americans are falling deeper into debt and further behind in savings. In fact, a 2019 Bankrate survey recently reported that 47% of Americans have credit card debt greater than or equal to the amount in emergency savings. So it’s time to do something about it. Not tomorrow. Not next week. Not “when the time is right”. Today. Right now. And I know just the people who can help. But maybe I’m getting a little ahead of myself...
While “winging it” may give you the thrill of freedom and living in the moment, it can also steal the very future you and your family are working hard to enjoy. So let’s get started. Personal Finance 101. Lesson 1: Order of Operations.
Remember in school when you learned how to solve a math problem? I know... I said it. Math. But stick with me here. Remember how your grade school teacher taught you that corny catch phrase? “Please Excuse My Dear Aunt Sally” (or some other version of it). Remember how that meant you needed to solve certain parts of the math problem before you could move on to the rest of the equation? Remember how everything in Parentheses needed to be solved first? Then you could apply any Exponents in the equation. Followed by Multiplication and Division, then Addition and Subtraction from left to right. Then you realized that corny little catch phrase would ultimately be your roadmap to solving the majority of math problems you’d face from that point forward. Chances are you haven’t forgotten it to this day.
Well, guess what... The same order of operations rules apply to finance. Except you never learned them. Because you were never taught. And we’re going to change that. Right now. So what are the financial order of operations? Let me give you another catch phrase. Bonnie Sells Donuts Inside the Gym. Whats it mean? Glad you asked.
It all starts here. You have to plan your monthly income and expenses. If your expenses exceed your income, that’s a problem. And if the timing of your income and expenses is out of wack and causing overdraft fees, that’s also a problem. Now here’s the good news. If you don’t know how to solve these problems, you don’t have to do it alone. Ever heard of Koach? Well it’s a Hebrew word for “strength” to start. Koach Financial is all about helping you achieve financial strength. In fact, they made a mobile app that helps you create a budget to do just that. You can download it for free on either the App Store or Google Play Store. Seriously, go check it out. I’ll wait...
The next priority is savings. Now you might be thinking, “Okay. I like the idea... But what about all my debt?” Good question. What happens when you run into an emergency or some other unforeseen expense, and you don’t have any savings to cover it? Yeah... Credit card bailout. Or worse, payday or title loan bailout. Each with interest penalties you just can’t afford. Fair enough? Now you might be thinking, “Okay. So how much should I have in savings and what tips can you share on saving effectively and efficiently?” Let’s not get too far ahead of ourselves. First, go ahead and piece together your monthly budget in the Koach app. Then stay tuned for Lesson 2.
After you’ve built up a safety net of savings, then it’s time to tackle your high interest debt. That means your credit cards, payday loans, title loans, car loans... and don’t forget about your personal loans. After all, dodging your brother in law for repayment on that advance he spotted you last month just isn’t a good look. We’ll talk about your student loans and mortgage later in Lesson 3.
I’ve seen that look before. “How do I figure out which debts to prioritize?” Simple. Chat with a Koach. What’s a Koach? They’re finance experts with hearts bigger than the size of your debt and can solve any money math problem thrown their way. I’m telling you... these pros are the real deal. And you can reach them directly through that mobile app. By the way, have you downloaded it yet?
Okay, so you’ve got your emergency savings fund nestled. Your high interest debt is mostly under control. Now what? Well. For some, it might be licking your wounds from that Bitcoin bust and going back to a more traditional investing approach. For others, it might be patiently waiting on the Bitcoin rebound that may or may never happen. Either way, I can’t tell you what to invest in (or not to invest in), but I can say it’s important to begin thinking about how much you’re going to need in the future to retire comfortably along with what you can do now to get there. I have a feeling you’re really going to enjoy Lesson 4.
Okay, I’ll come clean. Goals don’t necessarily come last in the order of financial operations. In fact, they’re embedded in every single one. What is it that you want to accomplish throughout the process of building up emergency savings, paying down debt, and investing for retirement? Renovate the kitchen? Pay off your home? Start a family? Each of these are woven into your financial strategy and can be accomplished with the proper planning, trustworthy tools, and devoted discipline. We’ll take a deeper dive into what certain goals might mean for your financial plan in future lessons.
So there you have it. Lesson 1. Order of Operations. We’ve only scratched the surface, but these are the fundamental principles that will help bring order and structure to your financial lives. The game plan that will prepare you for your financial fight. And best ofall, Koach is the team in your corner with the tools and resources equipping you to perform to the best of your ability. Good talk. Hope you’re looking forward to our next lesson as much as I am.