Start Building Wealth Today (a 7 step guide)
Jan 25, 2025Read time - 3 minutes / Disclaimer
Knowing what to do each time you're paid can:
- Destroy your debt.
- Grow your savings.
- Boost your investments.
Unfortunately, most financial planners cost $200+ per hour.
What To Do With Your Paycheck
Getting paid is great but—
Now what?
Should you:
- Add to retirement.
- Pay down a credit card.
- Put more money in savings.
The options are endless.
Yet, the money is not...
When I was growing up.
I'd hear people say things like:
"Enjoy what you have"
"Money isn't everything"
"Money doesn't = happiness"
I agree but:
Stressing over bills.
Feeling stuck in your job.
Living paycheck to paycheck.
Doesn't = happiness either
After obsessing over money (and working in banking).
I came across a tool that helped grow my net worth from $0 to $1M.
It's called:
The Cash Flow Guide
It helps you build wealth by prioritizing your incoming cash.
You work through the 7 steps in order (step 1, step 2, step 3, etc).
Let's dive in:
Step 1: Emergency Savings
Build up a cushion of money for the unexpected.
Things like:
- A dental bill.
- A problem at home.
- A problem with the car.
Having $3k+ in a savings account keeps you from using credit cards unexpectedly.
Step 2: Retirement Match
An employer retirement match is the closest thing to free money.
The average match is around 5% of your annual income.
If you make $70,000 per year.
5% is $3,500 each year.
Invest enough to get your full match.
Getting a retirement match can be worth $100k+ over many years of work.
Step 3: Credit Card Debt
Get a guaranteed 20%+ return on your money.
The average credit card interest rate is over 20%.
Getting to a $0 balance can save you thousands in interest costs each year.
Paying off debt that has a 9%+ interest rate makes good sense before investing further.
Step 4: Cushion of Savings
Build a cushion of money for life's uncertainties.
Big things can happen like:
- Losing a job.
- Needing a new car.
- Having large medical costs.
Saving at least 3 months of your monthly expenses helps you navigate the unexpected.
Step 5: Max Your Roth IRA
Build tax free wealth.
You can put up to $7,000 per year into a Roth IRA if you make $150,000 per year or less (as of 2025).
That's $583 per month.
This works out to around $20 per day.
Here's how that looks over the last 30 years:
Investing in a Roth IRA provides you with tax free income in your golden years.
Step 6: Max Your HSA
Pay your medical bills tax free.
HSA = Health Savings Account
You can put up to $4,300 per year into an HSA as of 2025 if you qualify (ask your CPA).
Money you put into the account:
- Is not taxed.
- Grows tax free.
- Is used for medical bills.
Investing in an HSA provides you with tax free income to cover your medical costs.
Step 7: Max Retirement
Top off your retirement.
You can put up to $23,500 per year into a retirement account like a 401k (as of 2025).
That's $1,958 per month.
This works out to around $65 per day.
Money you put into the account:
- Isn't taxed when deposited.
- Grows tax free over the years.
- Is taxed when you take out the money.
Maxing out your retirement account can help you escape the 9-5 in record time.
Conclusion
After working your way through these steps in order:
The next set of options depend on your personal goals.
Options like:
- College savings.
- Paying off a home early.
- Making higher risk investments.
I hope you find The Cash Flow Guide helpful on your wealth building journey.
Keep building đź’°
See you next week.
P.S.
Need some debt payoff tips?
Try this:
