Set Up Your Financial System in Just Five Steps

Click here for a video version of this post


Today I’m going to go over 5 key steps to helping you set up a financial system to works for you rather than against you.


These five steps are designed to get your financial life in complete order and maximize your tax savings each year. If any step is not applicable to you or your finances, just skip it and go on to the next one.

Step one – get your employer retirement match. If you work somewhere that offers any form of retirement matching, your first step is to get that money. It’s literally free money—when people say money doesn’t grow on trees, they’re right, it is handed out for free by retirement matching programs.


Therefore, step one is to put in whatever you need to in order to get that matching. If they match dollar for dollar up to 6%, then you put in 6%. No ifs, ands, or buts. Just do it. If they match up to 3%, then you put in 3%. Don’t leave any of that sweet money on the table.

Now on to step two – max out your HSA contribution.


Your HSA is your health savings account and it has a triple tax advantage—you can check out my previous blog post on the topic but suffice to say it is even better than a retirement account because a) you can access the money now for medical expenses, b) it goes in before taxes and c) withdrawals (including earnings) are tax free if they’re used on medical expenses.

As a side note, this only really applies if you are able to invest your HSA.


Make sure you are allowed to set it up as an investment so you can get a solid rate of return each year. Maxing this out every year is a must if you qualify for one of these accounts. The IRS limits you on how much you can put in each year—as a side note, usually when the IRS limits your contributions to something, it is something you should do because it is to your advantage.


They wouldn’t limit you if it didn’t help you in some way. Think about it. For 2022, individuals are maxed at $3,650 and families are maxed at $7,300. Hit that number each and every year. You won’t regret it.

Step three – max out your Roth IRA. You didn’t think I’d make it through this blog post about your financial system without mentioning the all-powerful Roth IRA, did you? If you don’t have one, open it now—it can be opened as long as you can prove earned income. And it is an amazing retirement account that works in reverse of your 401k—the money goes in after taxes but the earnings grow tax free.


It is an amazing tool to build wealth and, once again, the IRS limits your contributions signaling that it is in your favor to max out. As of 2022, most individuals are maxed at $6,000 a month. Hit that max, each and every year, and you’ll be building wealth in no time.

Step four – once you’ve completed steps one through three, you’re back to your 401k. See how much more you are able to save above and beyond hitting your match. The 401k is a great tax benefit now as the money goes in before taxes thus lowering your tax bill at the end of the year. You save money with each dollar that goes in.


And the IRS lets you put a crazy amount in each year, up to $20,500 in 2022. If you’re making $100,000 a year at your job, you can save 20% of your income to your 401k. Add that to your $7,300 with your HSA, and you’ve just escaped paying taxes on $27000 of earned income. Excellent work.

How much you increase your 401k is up to you, but I highly recommend shooting for at least 10%. The key is that you won’t even see that money so you can budget around your take home pay after that deduction is taken.

This leads to step five, our final step: automate it all.


Set it up to be automatically transferred and deposited each month This goes for your 401K, your Roth IRA, your HSA, all of it. Make sure you set it up to run apart from your interference as this is the quickest and surest way to build wealth. Each of these accounts will be invested, and each will begin accruing compound interest which is the ticket to long term wealth.

Follow these five steps to get your financial accounts in order and begin living a rich life. Thanks for reading and be sure to subscribe for future blog posts.


9 views0 comments

Recent Posts

See All