The Four Pillars of a Strong Financial Foundation

A financial plan built on risky investments, debt, margin, or any other speculative position stands a could chance to collapse at some point if the economy takes a turn.

The Importance of A Strong Financial Foundation

While times are good, focus more on building your financial foundation so that you can weather the next storm and then capitalize on it on the back end.

The Four Pillars of a Strong Financial Foundation

Below are the four pillars of a strong financial foundation. If you take care of your business in these areas, you’ll be in an excellent position to weather almost any storm.


This pillar can also be most susceptible to a down economy. Therefore, while it’s essential to increase your income as much as possible, it’s also helpful to diversify your income streams. That way, if you end up losing your job or your business crashes, you still have other options.

Pay Down Debt

First, you have to commit to improving your financial situation. This starts by writing down your expenses for a month or two to see where your money is going. If you’ve never tracked your expenses or budgeted before, I guarantee that you’ll find money available.

Emergency Fund

Now that you’re making money and have paid down debt, it’s time to put money aside in case of an emergency. Ideally, you’ll want three to six months of living expenses sitting in cash or a safe asset with a low risk of losing money. Having an emergency fund will provide you with a financial safety net if you suddenly lose your job.

Retirement Savings

The final pillar of your financial foundation is retirement savings. When should you start investing in retirement? The sooner, the better. Every dollar you invest in your 20s will have decades to grow before retirement.

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