🍺 Mastering the Financial Order of Operations (FOO)

What’s up Party people, today we’re taking it back to the basics!

Depending on where you are in your life and your money situation, I think it’s crucial to know the basics about how money should be managed operationally. This article offers a road map that is generally sound advice. If the concept of a financial order of operations seems foreign to you, I highly recommend giving the whole thing a read—it’ll set you up nicely moving forward.

Today's Report: What is the Financial Order of Operations (FOO)? by The Money Guy Show

• Read the original article here

Cold Poor:

The Financial Order of Operations (FOO) is a blueprint for managing money, ensuring that you’re making the smartest financial moves in the right sequence. Here's what you need to know:

• The 9 Steps of Financial Order of Operations:
  

  1. Cover Your Deductibles: Build a cash reserve to cover your highest insurance deductibles.
     

  2. Employer Match: Contribute enough to get the full employer match in your retirement plan. It’s free money.
     

  3. High-Interest Debt: Pay off any high-interest debt quickly. Think credit cards.
     

  4. Emergency Fund: Save 3-6 months of living expenses for emergencies.
     

  5. Max Roth IRA/HSA: Prioritize these tax-advantaged accounts.
     

  6. Max Out Employer Plans: Fully contribute to your employer-sponsored retirement plans.
     

  7. Hyperaccumulation: Invest 25% or more of your income to grow your wealth.
     

  8. Prepay Future Expenses: Save for big future expenses like college or a vacation home.
     

  9. Prepay Low-Interest Debt: Pay off remaining low-interest debts, like your mortgage.

My Poor:

I stumbled upon the Financial Order of Operations (FOO) after already having a decent chunk of savings—so, not the worst spot to be in, right? The problem? That cash sat in a savings account for years, doing absolutely nothing. Why? Because I had no clue what to do with it. I thought avoiding risk meant playing it safe. Spoiler alert: I was wrong.

Had I found the FOO sooner, it would’ve lit a fire under me to explore what comes after the emergency savings step. Thankfully, someone smart told us to set our retirement contributions at 15%, which went into a nice, broad index fund. But if I had understood the full roadmap earlier, our financial growth could have been on another level.

One thing—I’m not fully on board yet with steps 8 and 9. Maybe when I’m older, but right now? After locking down the emergency fund, I’m all in on investing. I’d prefer to pay for those future expenses from the growth of my portfolio. Also, I love cheap mortgage debt at the moment. Thanks for reading!

Thanks for reading! For the most part, the 20 people subscribed to PBR understand this concept already, but I know there are a few of you who could use the help 😀 Hit me up if you got questions and share it with a friend who will get value from the newsletter.

poor-boy-report.beehiiv.com

-Jordan Batchelor-

_{Disclaimer: The content provided in The Poor Boy Report (PBR) is for educational and informational purposes only and should not be considered as professional financial advice or investment recommendations. All information presented is based on personal opinions and research and may not reflect the most current developments in personal finance.}

_{PBR is not a registered financial advisor, and no content in this newsletter constitutes or should be interpreted as, a specific offer or solicitation to buy or sell any financial products or investments. Always consult with a licensed financial advisor or other qualified professionals before making any financial decisions or taking action based on the information provided in this newsletter.}