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By FPA member, Richard J. Durso, CFP^®, AEP^®

1. Compare your monthly income versus your monthly expenses. Establishing a budget can help you get a hold of your situation. Live within in your means and do not spend more than you make!
2. Pay off credit card balances each month. If you have current credit card debt, attack it each month by paying more than the minimum payment and/or the highest interest rate cards first.
3. Create a “safe and sound” fund. Build a cash reserve of 6 months (or more) of your living expenses. It may be a good idea to use a separate account as a 2nd tier cash reserve that may earn a bit more interest. Check out bankrate.com and googleadvisor.com for latest interest rates.
4. Save, save, save. Save at least 10% of your income. If you can save more, then do it!
   1. Take advantage of your company’s retirement plan. Make sure that you contribute at least up to the company match, if one applies. Tax deferred growth means that you won’t have to pay taxes each year so that money continues to compound without the burden of paying taxes until money is taken out in retirement.
   2. Open a Roth IRA. Distributions from the Roth IRA would be tax free in retirement. Attempt to maximize contributions each year. Income limitations apply.
   3. Begin a non-retirement investment portfolio. Some large mutual fund companies have a $1,000 minimum investment to open an account. Open it and invest at least $50 a month.
   4. What to invest in? Avoid load funds. You can get a similar fund at many large mutual fund companies without paying loads. Look for investments that charge minimal fees with good performance versus its peers that allow you to liquidate without any penalties whenever you choose. Match your goals to your investments. Diversify: have the right mix of cash, bonds, and stocks. Keep in mind that you may need your money to last 30+ years throughout retirement.
5. Set up 529 College Savings Plans for each of your children or grandchildren. Each year Morningstar ranks the top plans. You can open the plan in the child’s name as soon as the child has a social security number.
6. Ensure that you have adequate life insurance. If money is tight, consider term life insurance for low premiums and high death benefits for the years when you require the most coverage. i.e. when the kids are in school.
7. Your ability to earn a living is most likely your most valuable asset. Ensure that you have proper disability coverage. In addition, ensure that you have proper coverage in other areas (homeowners, auto, etc.). Have an independent broker review all of your insurance coverage. She or he can help determine if you are paying too much and if you have the right amount of insurance for your unique situation.
8. Establish three estate documents (a will, a health care power of attorney, and a durable power of attorney). Be sure that you name beneficiaries on any retirement account or annuity. In addition, ensure that you have named beneficiaries on your employer-sponsored retirement plan. This is general advice for people interested in building a strong foundation of financial success. Some items may not apply to your specific situation. If your situation is more complex, you should meet with a CERTIFIED FINANCIAL PLANNER™ practitioner from the Financial Planning Association.

Richard J. Durso, CFP^®, AEP^® is a financial planner at RTD Financial Advisors, Inc. in Philadelphia, PA.