Financial preparedness means having enough saved, invested, and protected that your family can weather unexpected hardship without panic. This 21-step roadmap provides a proven sequence for building lasting financial security — follow the steps in order, and progress becomes measurable and achievable.
Budgeting
Six levels of budgeting — from simply knowing your income, to using projections to eliminate debt and fund retirement.
Budgeting Guide →Debt Elimination
A proven priority-based system for paying off all consumer debt — including the President Ashton debt elimination calendar method.
Debt Guide →Extra Income
Practical side hustle ideas to accelerate debt payoff, build your emergency fund, or boost savings faster.
Extra Income →Reducing Expenses
Practical strategies to cut grocery costs, evaluate subscriptions, and reduce everyday spending without sacrificing quality of life.
Reduce Expenses →Retirement Planning
Overview of retirement account options, contribution strategies, and how to choose between ROTH and Traditional plans.
Retirement Guide →Estate Planning
The basic five documents every adult should have — and how to get them in place to protect your family.
Estate Planning →The 21-Step Financial Roadmap
Work through these steps in order. Complete each one before advancing to the next.
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Write your personal/family vision statement.
Clarify your values and long-term financial goals. Without a vision, it's impossible to know when you're on course or off. -
Assess your current financial standing.
Calculate your net worth. Gather statements for all accounts — savings, checking, retirement, debts, and insurance policies. Know exactly where you stand before deciding where to go. -
Pay tithing / charitable giving first.
Before any other financial allocation, set aside charitable contributions. Many families find this foundational habit transforms their relationship with money and abundance. -
Create and follow a written budget.
A budget is the roadmap for every dollar. See the Budgeting Guide for a practical six-level approach. Without a budget, all other steps are uncertain. -
Build a $1,000 starter emergency fund.
This small cushion prevents common financial emergencies (car repair, medical bill, appliance failure) from becoming new debt. Keep it liquid in a savings account. -
Obtain adequate health insurance.
Medical debt is the leading cause of bankruptcy in the United States. Ensure every household member has health coverage before attacking other debt aggressively. -
Eliminate all high-interest debt (12%+ interest rate).
Use the priority-based debt elimination method — pay minimums on all debts except the highest-interest one, which gets every available extra dollar until gone. Then roll that payment to the next. See the Debt Guide for the full President Ashton method. -
Expand emergency fund to 1 month of expenses.
Once high-interest debt is gone, grow your emergency fund to cover a full month of living expenses. This provides meaningful protection against job loss or major unexpected events. -
Begin contributing 3% to retirement.
Start small — but start. Even 3% grows significantly over decades due to compound interest. If your employer offers matching, contribute at least enough to capture the full match (it's free money). -
Save your insurance deductibles.
Set aside, in a dedicated savings account, funds equivalent to the deductibles on your health, auto, and home/renters insurance. This prevents a crisis when you actually need to file a claim. -
Eliminate all remaining consumer debt.
Credit cards, personal loans, furniture financing, and all other non-mortgage consumer debt. Use the same roll-down method as Step 7. -
Expand emergency fund to 3 months of expenses.
Three months of liquid savings provides genuine economic resilience — enough to handle a job loss, extended illness, or major home repair without going back into debt. -
Save 1% of home value annually for maintenance and repairs.
Homes require ongoing investment. Budget approximately 1% of your home's value each year for repairs and maintenance to avoid deferred maintenance crises. -
Pay off auto loans and student loans.
With consumer debt gone and an emergency fund in place, systematically eliminate vehicle loans and student debt. -
Increase retirement contributions to 15%.
The standard recommendation for retirement security. Maximize tax-advantaged accounts (401(k), IRA) first. See the Retirement Guide for ROTH vs. Traditional considerations. -
Save for children's futures.
Weddings, college, mission funds, or other anticipated major expenses. 529 plans offer tax-advantaged growth for education savings. -
Pay off your mortgage early.
With all other debt gone and retirement funded, accelerate mortgage payoff. Even one extra payment per year can reduce a 30-year mortgage by 4–6 years. -
Increase retirement contributions further.
With mortgage gone, redirect that payment entirely to retirement and investment accounts. This is where generational wealth is built.
Financial Health Ratios
Use these ratios to assess and monitor your financial health. They are quick diagnostic tools — not perfect measures, but useful benchmarks.
| Ratio | What It Measures | Formula | Healthy Target |
|---|---|---|---|
| Debt Ratio | What fraction of assets is owed as debt | Total Liabilities ÷ Total Assets | < 0.50 (less than 50%) |
| Current Ratio | Ability to meet short-term obligations | Liquid Assets ÷ Current Liabilities | > 2.0 |
| Liquidity Ratio | Months you can sustain spending without income | Liquid Savings ÷ Monthly Expenses | > 3 months |
| Debt-Payments Ratio | Percent of gross income going to debt payments | Monthly Debt Payments ÷ Gross Monthly Income | < 20% |
| Savings Ratio | Percent of income being saved | Monthly Savings ÷ Gross Monthly Income | > 10% |
Protection: Insurance Evaluation
Before accelerating debt payoff or building savings, ensure your family is adequately protected. Review coverage for each of these areas:
Health Insurance
Covers the highest-risk, highest-cost events. Being uninsured is one of the fastest paths to financial ruin. Prioritize this above all other insurance.
Home / Renters
Homeowners insurance protects your largest asset. Renters insurance (inexpensive) protects your belongings and provides liability coverage.
Auto Insurance
Minimum liability coverage is legally required in most states. Consider raising deductibles (and saving the difference) to reduce premiums.
Life Insurance
Essential if anyone depends on your income. Term life insurance is affordable and appropriate for most families. Avoid whole life in early stages.
Disability Insurance
Often overlooked — but a working-age adult is more likely to suffer a disabling injury or illness than to die during their working years. Covers income replacement.
Helpful Resources
- BYU Personal Finance Course — free online course covering budgeting, debt, investing, and insurance
- One for the Money by Marvin J. Ashton — available as a free PDF; a practical, values-based financial guide
- The Church of Jesus Christ's Financial Self-Reliance Course — free and available in many languages
- CFPB Debt Tools — government resource for understanding your debt rights