Home » Featured, Investing, Lifestyle

I’m In A Good Position Financially, What Can I Do To Take My Personal Finances To The Next Level?

24 July 2008 42 Comments

I recently had a conversation with a friend who mentioned they are in a pretty good financial situation. He had no debt, had just purchased his first house, and participated in a 401(k) plan at work. His question was what else could he do to improve his already solid personal finances?

Most of the personal finance information is targeted towards one of two groups:

  1. People who are a disaster financially: No assets, increasing high interest debt, and an income that becomes less and less sufficient. The advice for this group is typically to cut spending, pay down debt, and work harder.
  2. People who have more money than they know what to do with. These people are targeted because, well, they have money. Financial planners and advisers want them as clients. The typical advice is to diversify, diversify, diversify.

What about a normal 20-something that actually is in a good place financially like I described in the first paragraph?

There are steps to take to improve the already strong financial position that my friend is in. Let’s look at how we can take a good financial position and make it an excellent financial position.

  • Open an investment account and begin to learn how to invest money and learn the stock market. If you are maxing out your 401(k) and still have money you want to put away, consider opening a Roth IRA. I would definitely recommend using Zecco.com for your brokerage account. You’ll have no trading commissions and great service. Why are you currently paying for trading commissions?
  • Open a high interest checking and savings account to ensure maximum return on all money. Don’t be one of those people that has idle money. All of your money should be working for you, even your checking account.
  • Have an iron-clad identity. Identity theft is expensive and can take an enormous amount of time to get your identity completely back. Who can afford the cost and the time taken from you? I know I can’t thats why I use LifeLock. to ensure I don’t get hit by the surprise of a phone call telling me I’ve had my identity taken. It was an absolute nightmare for a buddy of mine who experienced identify theft; everything was fixable, but the time it took to deal with it was insane.
  • Sell your clutter. De-cluttering your house and life can make you feel better and put some cash in your pocket at the same time. Put some old furniture or other items for sale on craigslist, then throw that money you earn into your Roth IRA. Everytime I sell something on craigslist, I’m amazed again and again how easy it is.
  • Shop around for a better auto insurance rate. When is the last time you have done a comparison on what you pay for auto insurance? You might be paying more than you have to. I recently did a free quote comparison at Kanetix and was able to find a better rate and save a few hundred dollars a year. Not bad, and you can find out in a matter of minutes if you’re over-paying.
  • Earn more on your spending through a high rewards credit card. I use a Starwood Preferred Guest American Express Card to earn hotel points at my favorite properties. I love to travel and I love to stay at Westin and W properties, so everytime I spend money, I am earning points towards free stays. Figure out what you want to earn, then find the right card to earn it. It’s worthwhile to note that I never carry a balance; instead, I think of my AMEX as a debit card.

Additionally, the following items apply if you have a spouse and/or family. If you are single and nobody else depends on you, then the following probably do not apply. Although, you may still have an interest in researching and learning about the below listed products.

  • Protect your family with a will. I’m recently married and am expecting my first child. It’s weird when you find yourself thinking about a will for the first time. Being young is not an excuse to not get a will. Make sure your family is protected should something happen to you. I used LegalZoom to create a will. It was extremely easy and inexpensive. I would definitely recommend them.
  • Get Term Life Insurance. As a 20-something, you can qualify for some fantastic rates. I was able to get more coverage for more years than I thought for a very cheap price. Now that I’m married, this was a necessary move. If you’re young and healthy, get some cheap term insurance now and as your income rises, get additional policies for more coverage.

If I’ve left out any action to take to take your personal finances and wealth creation to the next level, feel free to add to the list by adding your comments!


  • Chris said:

    Only thing I don't agree with is the how you said to max 401k first and then throw the rest in ROTH IRA. I think you should meet the company match for 401k, then max out your ROTH IRA. Then if you have money left go to investment account or back to 401k to max out. Most 401k plans do not put you in the best investment choices(high expenses, limited choices), but of course you should take the company match first. Good Stuff though!

  • hank said:

    But again if it is someone who isn't financially knowledgeable a 401k might be a better place to stick it. You can still pick poorly in a ROTH IRA setup as you have the whole financial world at your fingertips, but in 401ks, the company is usually pretty good about what they'd let the employees invest in and a lot of times target-date funds make up a good chunk of it, and are bad for people that know what is going on, but good for people who have no clue what's cooking but want to put their $ somewhere…

  • hank said:

    Hm – just wrote a long one and it apparently didn't save – recap:

    If you're a complete newbie to investing and have a 401k and the option for a ROTH, yea, ROTHs are easy for us to understand how they work and setup is a breeze, but for someone that is just coming out of the brush to learn investing, a 401k is sometimes a better place to keep it. Most companies aren't going to put their employees 401k money in crappy funds. There are teams of people that watch this each year at the big companies.

    True you could get stuck with a bad 401k team at your company, but they will usually default your money into a target-date fund and for those that haven't a clue, it's a decent start whereas a ROTH means setup, and finding your own financial advice (which can clearly be found here, but likely those that don't know what a ROTH is may never find this site) and then deciding what to invest in.

    You'd be surprised by the power of laziness! :)

  • kevin duffey said:


    Actually I’m in agreement with you. You’ll see that whenever I reference 401(k)s, you should only input as much as needed to maximize company matching because like you said you don’t have the flexibility in what investments to choose. I prefer all other money to go into a Roth after company matching is maximized.


  • kevin duffey said:

    Hank, sure if the person has no idea what they’re doing when it comes to investing, a 401k is a great option. I really encourage people to LEARN more so they can take more control of the investing.

    If a person has no desire to do more, than sure the best thing for them to do is to put as much money as possible into their 401(k). It definitely will compound over time.

  • Chris said:

    unless your company offers index funds in your 401k (or really good low cost mutuals), you are better off going to a Roth and buying them there. I don't think it is difficult to open a Roth and select an S&P 500 index fund. This has historically beat most mutual funds in the past when you include expenses. So if you are a set it and forget it investor, and still young, I still think people should be encouraged to go outside the 401k (most 401ks are set up for the benefit of the plan provider, not the consumer). #1 reason we should have financial planning as a course in high school, to indoctrinate them with the simple things.

  • kevin duffey said:

    Remember, a 401(k) is a must if company matching is offered. Don’t refuse free money. After matching is maxed out, I agree with you on the Roth point.

    A financial planning course in high school would be incredible for the future of our country. I’m in total agreement there.

  • Rob said:

    @Honey — since when? A will (or no will, known as intestacy), does not trigger a tax liability for the benficiaries. Taxes (assuming the estate is large enough to generate estate tax) are paid by the estate itself. As for the theoretical "trust" you're talking about, you had best set it up right if your want to achieve tax savings in the manner that meets your objectives. You don't do that with online forms.

    Please be careful. What you have just repeated is dead wrong.

  • Personal Finance said:

    Today we can say with confidence that there is no better time but right now to start managing your finances better.

    Budget. Knowing your own or your family budget is the first and the most important step.

    Credit Report. Another important aspect of finance management is knowing exact state your credit report.
    Act Now. While it is hard to act when you receive negative information about your financial report or your current difficult financial state, you may be tempered to ‘close your eyes’ to what’s going on in your financial life.

    Your major responsibility is to act right this very moment. This means that you have to come up with several financial plans that are going to help you to make your financial state better.

    John Righ @PFinanceBlog

  • JackDeneris said:

    Budget. Knowing your own or your family budget is the first and the most important step.
    Credit Report. Another important aspect of finance management is knowing exact state your credit report. Act Now. While it is hard to act when you receive negative information about your financial report or your current difficult financial state, you may be tempered to ‘close your eyes’ to what’s going on in your financial life with Sugar Daddy.Your major responsibility is to act right this very moment. This means that you have to come up with several financial plans that are going to help you to make your financial state better. Austin Locksmith

  • lose weight said:

    im single and this helps me open my mind to knock on new opportunity. great i will be sharing this info.

  • apply for cash said:

    My partner and i acknowledge together with your results and can thirstily look ahead to your current upcoming improvements. Thanks and also go on submitting more valuable info.

  • blocked or down said:

    Games are not only important in a sense that they enhance our muscular strenghth, they are e

  • shona628 said:

    I think I am quite anxious about this technical meeting and I want to know the feedback of this meeting.I am sure it will be an extremely informative one and all those will attend it will be quite beneficial.
    ricette cocktail

  • web design nyc said:

    There is no cosmetic for beauty like happiness.

  • sehrish said:

    The plainer the dress, the greater luster does beauty appear.
    website design new york

  • viagra said:

    games play an essential role to maintain our health. Games are as important for a body as food is for brain.This article deals with games.

  • viagra said:

    The love of beauty in its multiple forms is the noblest gift of the human cerebrum.

  • viagra said:

    First method is good

  • cialis said:

    Your blog page is excellent. Thank you truly for sharing a huge amount of powerful ideas. I will bookmark your web site and will be without a doubt coming back. Again, I appreciate all your work and supplying much priceless info for the many people.

  • viagra said:

    Your article is a great piece of informational content I can really understand. You have done a really great job with making your points clear. I agree with many points in your content. Thank you.

  • dddd said:

    Excellent work every buddy can get lots of interesting information, keep on posting this type of brilliant articles.
    supermicro a+

  • sehrish said:

    Great job on this material! I can't tell you how this changed my thought processes on this subject. You really are a compelling writer with a flair for informational content.
    gaming computers

  • sehrish said:

    After study a couple of of the weblog posts in your web site now, and I truly like your approach of blogging. I bookmarked it to my bookmark website listing and might be checking back soon. Pls take a look at my website online as properly and let me know what you think.

  • (S,G) said:

    health is the state of body or mind. Being in a good health means everything in the body is working properly. The factors affecting good health could be enumerated as healthy food habits, games, exercise, being on time, healthy sleeping schedule, water ba

  • cialis said:

    Hey your site is really great I came across while in search for brand info on bing and it has lots of related information on it. Will be sure to come back again and bookmark. Keep up the great work!

  • viagra said:

    Your blog is so beautiful and natural all are like your blog everyone appreciate your blog. Whenever We will see your blog every time we get something new about your blog This is the very informative content. I am very appreciate to your site who provide

  • viagra said:

    A very good method for detection of spam! good job! I will try it on may side!

  • viagra said:

    Games are not only important in a sense that they enhance our muscular strenghth, they are e

  • viagra said:

    Games are not only important in a sense that they enhance our muscular strenghth, they are e

  • viagra said:

    The second method is much simpler and (surprisingly) effective. The majority of comment spam is left by a bot (rather than a human). Most bots will parse the HTML to determine the form the HTTP request needs to take by looking at the elements of the comment form. I have added a text-field named "email". Using CSS, I have hidden it from view (using the display style). The bots don't apply the CSS when parsing the HTML document, so they think this is another field that needs to be filled in. However, a human will never even see it and won't (in general) be aware of its presence. So, if this field is filled in, it is assumed the comment was posted by a bot and the whole thing is automatically discarded, without even going through the scoring process above.

  • cialis said:

    I thank you for taking your time sharing your thoughts and ideas to a lot of readers out there.

  • ftp space said:

    Because 25 to 30 percent of identical twins have separate placentas and amniotic sacs, they are sometimes misclassified as fraternal twins.

  • nisha said:

    Surely, you are right with this point. I think all consumers will not make their criteria become real for shopping since there are lots of choices.

  • buy old crappy viagra said:

    It is perfect time to make some plans for the future and

    it is time to be happy. I’ve read this post and if I could I wish to suggest you few interesting things or suggestions. Maybe you could write next articles referring to this article. I desire to read more things about it!

  • seo services said:

    Great article! your internet site is great! I just now can’t halt reading this article. Their consequently clean, therefore stuffed with revisions that I simply just didn’t understand
    seo services link building

  • top ranking said:

    Your own report is nice , Someone said the document to know considerably in addition to aspire to call at your next content, look ahead to your own masterwork, you may also view our soccer ball gowns facts, I am hoping it could possibly give you You actually some practical.
    top ranking seo services