{Live from the Cat Ranch!} This video kicks off our Money Smart Monday series. The truth is, money touches E V E R Y T H I N G in our lives. We believe having a strong financial foundation is key to reaching your goals and living out your dreams!

Dan’s discussing the four different elements of a strong financial foundation. Let’s walk through them together.

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Strong Financial Foundation Personal Finance Reach your Goals

Welcome to our very first Money Smart Monday!

The purpose of these videos is to help share some personal finance tips, whether you are traveling full time or you’re interested in traveling. Or maybe you own your own business and you’re looking for some more help with your finances. Either way, I really hope that these videos are going to help educate you and give you some more information on some different aspects of your finances.

So today, we’re going to talk about the four pillars of a strong financial foundation. It’s going to be a pretty broad overview. We’re going to go into depth in later videos on some of these things, but just to start us off, let’s talk about why it’s important to build a strong financial foundation and what are the different parts of that financial foundation.

Create & Follow a Budget

The first pillar is your budget. We don’t always like to say budget, but you can think of it as a spending plan. The idea is to be more mindful of your spending. You should be aware of where you’re spending your money every month, and you can use your budget to direct your money where you want it to go throughout that next month or that next year.

A budget is really the starting point. If you’re looking for a place to start with your finances and you know you want to pay down debt or you want to save for retirement, the first thing you should do is make sure that you have a solid spending plan in place. That way, you know exactly where you’re spending your money every month.

Proper Insurance Coverage

The second pillar is insurance or risk protection. There’s so many different things that can throw your finances out of whack and that’s why there’s insurance. It exists to protect yourself. A lot of people are familiar with auto insurance or homeowners insurance, as they are pretty common insurance policies.

People aren’t as familiar with life insurance or liability insurance. And again, those are things we’re going to dive deeper into in later videos. Just know that insurance is really a strong part of your plan.

Build an Emergency Fund

The third pillar of a strong financial foundation is an emergency fund. An emergency fund is kind of like an insurance policy except you’re your own insurance agent! You’re just setting aside a pot of money so that if something breaks down or you were to lose a job, some type of major financial impact, you have that emergency fund to help hold you over. It’s a really important part of your financial foundation.

We actually house sit full time; that’s how we travel around the country. And before we started full-timing, we had an emergency fund built up. We’ve had to tap into that a number of times throughout our journey, so thankfully, we had that emergency fund! Otherwise, we probably would’ve had to stop traveling by now.

In any case, an emergency fund is a really important part of your finances. Regardless of if you’re traveling, but especially if you’re traveling!

Estate Planning Documents

The fourth pillar of a strong financial foundation is your estate plan. Now, an estate plan is made up of things like your will and power of attorney. Estate planning documents make sure that your assets are divvied up how you want when you pass away.

A Will

A will is important to make sure that there is no question about where you want your things to go when you die. Now this could be especially important if you have kids. Think about if you were to pass away or if you and your spouse were to pass away, who would you want to take care of your kids? Those are things that can all go into a will to make sure that there’s no question.

I think we’d all agree that we would rather make those choices than have a court make those decisions for us. So that’s why having a will is so critical.

Power of Attorney for Health Care

Another estate planning document is a power of attorney for health care. That is where you designate somebody to make decisions on your behalf should you become incapacitated.

If you were in an accident, let’s say, and you were in a a coma, do you want to be on life support? What are some of your other wishes? Who’s allowed to make health care decisions for you if you can’t make them yourself? That’s what a power of attorney for health care exists for.

Power of Attorney for Property

There’s also a power of attorney for property. Same logic as a power of attorney for health care, a power of attorney for your property states who can make decisions on your behalf on your property. Can somebody sell off your real estate or get into your bank accounts if they need to pay bills? You want to be able to designate the person to do that.

And again, the purpose of these documents is to ensure that your wishes are carried out the way you want instead of having a court or somebody else or the court making those decisions that you don’t want.

Recap

To recap, the four pillars of a strong financial foundation are your budget or spending plan, insurance coverage, an emergency fund, and estate planning documents. Hopefully that gives you some idea of where you should start.

Going through these four things, maybe there’s a certain pillar that is lacking for you. Maybe you don’t have a will put together or you don’t have a life insurance policy. Hopefully this video sparks some discussions about what some of the things that you need to do next are in your personal finances.

Feel free to reach out to us if you have any issues or leave a comment. Be sure to subscribe on YouTube so you don’t miss the next episode of Money Smart Monday!

 

The Fun Stuff:

How we started full-time travel
The cost of house sitting full-time
How to build a money smart business

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