There are the 4 financial foundation essentials that many people overlook before spending big money on investing or buying a home.

As many of us in the U.S. have a third round of stimulus money coming, and perhaps even a tax refund this month, it’s critical to make sure you have these 4 areas covered now.

Before you decide how to spend or invest extra cash, make sure you have these basic personal finance building blocks covered!

Do you have these 4 Financial Foundation Essentials in place?

1. A Spending Plan

Knowing what is coming and going is a critical step in managing your finances. Without a clear picture of what you’ve got to work with and where it is currently going, it’s extremely difficult to make progress towards financial goals such as saving, paying off debt, and investing. If you’re not sure where to start, grab a pencil and paper and just write everything down. Budgeting is something I LOVE to teach and can walk you through, step by step. 


2. Insurance

There are so many areas to consider to ensure proper coverage,  but the key here is to cover all of your bases. Even with cash in the bank or thousands of dollars in an investment account, one accident or health issue without proper insurance coverage could wipe out all the assets you have worked so hard to build.

Think about areas of your life beyond the basics of health, auto, and home or renter’s insurance as well.  Do you have any family members dependent on your income?  Ensure they are not left high and dry by having a life insurance policy in place. Do you have a pet? Strongly consider pet insurance so you don’t have to make a tough decision between care or finances for your beloved furry family member.  Live in an area with a high cost of living?  You must consider an umbrella policy.  I’m happy to introduce you to my wide network of trusted insurance professionals if needed.

3. Credit & Debt Management

I believe that credit is a tool to be leveraged to help build financial resiliency and wealth.  Managed well and built responsibly, credit can help with purchasing a home, starting a business, and being able to take advantage of investment opportunities when they come along. Credit can also act as a source of emergency funds in a pinch.

Paying off debt to build credit and free up credit lines is also critical to financial health & resiliency. This is a financial health basic that must be in order before you start making significant strides in growing your wealth and financial resiliency. If you could use help strategizing a debt payoff plan, I can help.

4. Emergency Savings

While having cash to cover 3 months of basic living expenses has typically been the recommendation of financial experts, we can easily find examples from the last year where 3 months has not been nearly enough even for families qualifying for unemployment and stimulus assistance. Many financial professionals now recommend having 8-12 months of minimum living expenses saved.

If this seems overwhelming and impossible, start small. Once you achieve your first goal, bump it up. Having this cushion makes a lot of sense to build resiliency in the case of hard times, but it also builds financial discipline and can prepare you for an investment opportunity when it comes along.  If you know you need to build up an emergency fund, but lack the accountability to make it happen, I can provide that for you. 

Once these 4 financial foundation basics are in place, only then do I recommend spending, donating, or investing your next windfall! 

When you’re ready with that windfall you’ll need some good advice. Watch my interview on the Millionaire Imprint for Women.

Michelle Boss

Michelle Boss

Michelle Boss is a Personal Finance Coach and Certified Financial Education Instructor. She is certified through the NFEC. As a Professional Money Coach, Michelle helps successful women get smart with money so they can grow their wealth and finally feel financially secure. With Michelle’s Group and One-to-one Coaching Sessions, she helps take the Fear out of Finances.