The “If all you do is this, you’ll probably be OK” approach to financial planning

If you aren’t working with a financial planner or you don’t have the time to do a full plan right now, you can follow these steps to keep your finances in pretty darn good shape.

Give every dollar a home

A simple way to manage your money is to systematically divide it up among various accounts as it comes in. Then, as long as you live on what’s in the accounts, you’ve got some pretty great financial controls in place. It’s up to you to decide how much goes into each account.

We recommend different accounts for:

  • A checking account for fixed expenses like housing costs, utilities, cell phones, debt payments etc.

  • Another checking account for necessary but variable expenses like gas and groceries. If you use cards, pay them off monthly from this fund.

  • A savings account for necessary & large expenses (>$50) like insurance payments, car and home repairs, and other vital purchases.

  • A savings account for emergency funding (see more on this below).

  • A savings account for fun & large spending (>$50) like vacation and fun items as well as Christmas spending.

  • Walking around “fun” money (if you don’t want a third checking account, just withdraw enough cash for the week; then, when it’s gone, it’s gone).

Make a fund for emergencies

Save enough to cover 3 to 6 months of expenses, unless you have a lot of high-interest (>10%) credit card debt. In that case, save $1,000 and then focus on building your emergency fund once you’ve paid off that debt. We like to put this funding in a bank or account that’s hard to access. One trick to avoid using it unless you need to is to get it to a nice, round number and then have the mantra, “Don’t break the seal!”

Manage your debt

  1. If you have credit card debt, try to consolidate it to the lowest interest rate possible and then pay off cards with higher interests rates first.

  2. Use the financial controls plan at the beginning of this article to avoid adding more debt in the future.

Take advantage of the benefits your job offers

  1. Invest enough to at least earn the match in your employer retirement plan (who doesn’t love free money?).

  2. Invest more if you can afford it, shooting for at least 10-20% of your income.

  3. Ensure you are taking advantage of employer’s life, health, and disability insurance offerings.

  4. Lastly, don’t forget to fund tax-free spending accounts (more free money!).

Earmark dollars for retirement

If you have a job and followed steps 1 and 2 above, you’re already in good shape. If you still need a place to put tax-advantaged money, consider opening an additional account. At Montoya Wealth, we often recommend investing up to around $5,500 a year into a Roth IRA, an attractive vehicle if you’re young and want to enjoy relatively large tax-free earnings once you retire.

Get life and disability insurance if you need it

Here’s a good tool for determining your life insurance needs: Remember: You may already have life insurance through your employer.

Financial planning is not only about managing money; it’s also about keeping life’s whammies from taking you out of the game. This is where disability insurance comes in. Hopefully, you already have some short- and long-term disability insurance through your employer. If not, you may be able to buy it through your employer. Failing that, check with any professional organizations you belong to or buy an individual plan through a broker or big company. Here’s a good resource to get you started:

Have a plan for big purchases

Things like car purchases, down payments and vacations all require money. Make a plan to fund them by figuring out when you need to make the purchase and dividing that amount by the number of months between now and then. For example: If you want to buy a car that costs $12,000 in three years, you’ll need to save $333 per month ($12,000/36=$333.33). One thing: If you’re saving for your kids’ college, in all likelihood, you’ll need to invest that money rather than just save it. A fantastic “if all you do is one thing, do this” option is a Coverdell Education Savings Account, which allows you to save $2,000 per child per year.

Get your estate pretty well in order

At the very least, ensure you have designated “transfer on death” beneficiaries on your bank and investment accounts. For extra credit, pick up a beneficiary deed template at the Yavapai county office, fill it out, notarize it and file it with the county. This will pass your house directly to your heirs, no probate needed. Want more guidance? We have a nifty checklist you can use to find out what gaps exist in your estate planning. We’re happy to share it.

Questions? Give us a call at 928-308-7650, an email at or schedule an appointment with us by visiting