Personal Finance Pyramid
Personal finance is one of the most important topics currently not taught in most schools. By the time people learn, usually through bad experiences, they have already put themselves years behind where they could have been with proper education. My goal and passion is to share what I learn on my journey.
My framework for personal finance is very similar to the nutrition pyramid that IS taught in schools. I’ll hit on the highest level here, but I’ll spend much more time in each area.
The Personal Finance Pyramid
Base: Creating a Strong Foundation – this is the first layer and most important. You can’t start building or accelerating your personal finances until you take care of the base. This layer is all about paying off high interest consumer debt (e.g. credit cards, cars, etc.) and building your emergency fund. The most important part of your financial plan is to protect against the downside since we know life is anything but predicable.
Middle – Bottom: Building for the Future – Once you have your base layer, it’s important to create and automate your financial plan. The best way to stick to something is to automate / direct deposit everything so you don’t need to think about it. This is also where we build a plan to achieving a health financial position for retirement through tax efficient plans like 401ks, IRAs, etc.
Middle – Top: Accelerating Financial Freedom – Now you’re ready to have some fun. This is when we work on accelerating your path to financial freedom (or whatever other goals you have). This is where I spend most of my time and energy since I find passion in this area.
Master – This is primarily for accredited investors and centered around investing in non-public assets (businesses, real estate syndicates, alternatives, etc.). These investments are not required for achieving financial freedom, but some will find them interesting as they move throughout their financial journey.
