Back to Basics

The market had a rough day today. The S&P 500 decreased 3% (that’s a lot) for its worst day since September 2022 (not a great year for the stock market.) Clients are nervous and investors are scrambling to explain the movement. For many reasons, which I will go into detail on in a future post, I don’t want to focus on the market tonight. I want to take this opportunity to get back to basics of personal finance.   

I figured there’s no better time for me and my family to revisit the basics of our finances than a day that brings me back to 2018 – I was studying for the CFP and being inundated with interview requests about recession planning. I learned the fundamentals for my job and used them personally to take control over my money. At some point in the last 6 years finances (and life) got complicated. So I’m going to start from scratch, rebuild just like I’ve guided hundreds of clients to do over the years, and this time document and share the journey for your benefit. 

We’ll start with cash savings. I can’t control the market, but I can control what I save and what I spend. Before you start to invest in an IRA, buy a house or trade stocks, you need to make sure you have some cash set aside in case of an emergency – and damn I’ve had more than a few of those over the last few years. An emergency fund, often recommended to be 3-6 months worth of your essential expenses, is a foundational component to your financial wellbeing. Years ago when I was working and still living with my parents I was able to build-up an emergency fund in about a year. Today, our emergency fund is not fully funded – our expenses have grown meaningfully with a mortgage and a toddler in daycare, and I neglected to replenish after being RIF’d from my tech job 2 years ago. Rebuilding our emergency fund could take years, and this is likely true for you, too, especially if you’re doing it for the first time. Like any goal, we don’t want to look at the peak of the mountain, we just want to start with the step in front of us. So our first goal is to make sure we have $1,000 cash. Whether that gets you halfway to your emergency fund or 2% of the way there, it’s a specific, very tangible and attainable goal. This is where we start.

A quick check of my HYSA - yep, we have over $1,000 cash ✅

Next Level Activated