A Solid Home Needs a Solid Foundation

solid financial foundationNo matter where you are in your financial journey, it’s good to note that building wealth is a marathon not a sprint. It takes time, patience, discipline, and accountability. As with building a home, financial success starts with a good plan and a solid foundation. Many investors make a couple of key mistakes – starting without a plan and skipping the foundation.

The Foundation

What makes up a solid financial foundation? There are four core pillars. The first one is your debt (or hopefully lack thereof). Ideally the best footing is to be debt free or debt free except for paying off your home. If you are not debt free, priority number one is to create a plan to become debt free (except your home) within two years. The second core pillar is a fully funded emergency fund. This cash should be set aside in a savings account and totally accessible at any time.

Keep in mind, not all emergencies happen during banking hours (meaning you may not be able to get to your cash if you absolutely needed to on a Sunday morning). Having a little cash at home in a safe is a good way to offset that risk. Your emergency fund should equal somewhere between three and six months’ worth of living expenses. The third pillar is addressing all insurance needs, including life insurance and disability insurance. What would happen if you didn’t wake up tomorrow? Are there loved ones who depend on the income you earn? Having the appropriate amount of term insurance is essential. Disability insurance is another often-overlooked risk, despite the fact that the probability of becoming disabled is greater than the probability of dying. The last core pillar is to make a plan. Work with an advisor to help create, implement, and maintain your plan.

Build Wealth

With a solid foundation in place, the pathway is clear to begin building wealth. As Dave Ramsey says, the greatest wealth-building tool we all have is our income. If you are debt free, have a fully funded emergency fund, have the right amount of insurance, and you are implementing your plan with an advisor, then the wealth you build can withstand all the storms life can throw at you.

Author Image

About Ryan Costello

Ryan was born and raised in Olathe, KS and currently resides in Leawood, KS. He played college football while earning his degree from Baker University. His drive and competitiveness stems from his background in athletics, which has played a big role in who he is today. Ryan has been a Financial Advisor since 2002. Although he didn’t realize it at the time, his destiny into the world of finance began early in his high school days when a checkbook of his didn’t quite balance out. From that point forward, he developed a meticulous attention to detail with all things financial – a trait that he proudly carries with him today.

View All Posts
This entry was posted in Blog by Ryan Costello. Bookmark the permalink.

About Ryan Costello

Ryan was born and raised in Olathe, KS and currently resides in Leawood, KS. He played college football while earning his degree from Baker University. His drive and competitiveness stems from his background in athletics, which has played a big role in who he is today. Ryan has been a Financial Advisor since 2002. Although he didn’t realize it at the time, his destiny into the world of finance began early in his high school days when a checkbook of his didn’t quite balance out. From that point forward, he developed a meticulous attention to detail with all things financial – a trait that he proudly carries with him today.