This is the ninth and final post in a multi-part series on how to manage your finances so you can build up your savings, have a safety net, and still live comfortably today without having to live paycheck to paycheck.  Click here for part 8, which discusses credit cards.

Over the past 8 articles, I’ve given you a lot of information on how to manage your finances.  If it all seemed overwhelming, this article should help clear things up.  Below, I’m going to provide you a detailed plan that should help you make sense of it all.  I’m going to assume that you have a steady paycheck coming in once or twice a month:

1. Get your insurance needs out of the way – When you first signed on with your employer, you should have had the option to take care of a variety of insurance (medical, dental, vision, life, disability, etc).  Hopefully, you got everything squared away back then, but if not, go ahead and contact your HR representative and see which of them you can knock out now.  Go out and buy home owner’s or renter’s insurance if you don’t already have it.
2. Figure out your expenses – Calculate what you’re going to need to survive each month.  Add to that any monthly debt you need to pay off.  This is the minimum amount that should be coming into your checking account each month.  If you find yourself not meeting that goal, you’re going to have to make some changes.  Ideally, you’ll have quite a bit more than this coming in, but try to shoot for at least 2-3 times your monthly expenses.
3. Deal with your debt and your tax-free retirement accounts – In step 2, you calculated the amount you’ll need for your debts.  Pay those off on time every month.  With the money that’s left over, figure out how much of it you’d be willing to give up each month and then instruct your employer to deposit that much into your tax-free retirement account (401K, Roth 401K, 403B, etc).
4. Build up your emergency fund while keeping your checking account healthy – Whatever you have left should go towards building up your emergency fund, making sure to leave enough in your checking account to account for unexpected expenses.  It may take you several months to a year of building up these accounts before you’re able to stop contributing to them, but stick with it, it’s well worth it.
5. Explore future needs – At this point, you’ll have a solid foundation for your current financial situation, and you’ll have started building up your future, slightly.  Your next step is to look at what you’re going to need in your life going forward.  If you expect to buy a new car, put a down payment on a house, or make another large purchase, you should set up a separate account that you can contribute to on a monthly basis, specifically for that purchase.  If you don’t anticipate having to make any such purchases, you should start investing in the market.  Look into a variety of mutual funds, see which ones fit you the best, and start contributing to them using the dollar-cost averaging method I discussed earlier.

Those are pretty much the basics of setting up a solid financial foundation.  After a year or two of going through this plan, you should be able to make a significant dent on your debts, have a solid emergency fund in place, have enough in your checking account to take care of a large majority of unexpected expenses, and have a good start towards securing your retirement.  If you can cover all of your expenses with a good credit card that provides cash back or other rewards while still paying off your balance in full every month, then you should go this route.  Otherwise, be careful of what you charge.

If you want additional advice and information on what you should be doing, I’d strongly recommend purchasing The Wealthy Barber.  This is the book that taught me nearly everything I’ve learned about personal finance (granted, I’ve picked up a few tidbits here and there on my own).  It was the book that enlightened me on the importance of managing finances early.  On top of that, it’s actually a pretty fun read, unlike most other financial books.  If you’re serious about getting your finances in order, reading this book is mandatory.  It’s the best $10 you’ll spend.

I hope you’ve enjoyed this series, and more importantly, I hope I’ve been able to give you a starting point for improving your financial situation.