I’ve Got My Emergency Fund Squared Away — Now What?

Core Insights - Building an emergency fund of three to six months of income is a significant achievement and serves as the foundation of a successful financial plan [1] - An emergency fund is just one aspect of financial planning; there are additional financial goals to pursue after establishing it [2] Debt Management - Paying off credit card debt is crucial, as the average interest rate exceeds 21%, which can lead to rapid debt accumulation [3] - Advisors recommend prioritizing the repayment of high-rate debt before starting an investment program, as paying off such debt effectively provides a guaranteed return equivalent to the interest rate [4] - For instance, a $10,000 credit card debt at a 21% interest rate would increase to $12,100 in one year, while paying off the debt saves $2,100, akin to earning a 21% return on an investment [5] Retirement Planning - After establishing an emergency fund, it is advisable to boost or start contributions to retirement plans, such as IRAs and 401(k) plans, which are beneficial for long-term wealth accumulation [6] - Employees should aim to contribute enough to their 401(k) plans to maximize employer matching contributions, which can significantly enhance total savings over time [7][8] - For those without access to a workplace retirement plan, maximizing IRA contributions is recommended, allowing for tax deductions and tax-deferred growth, despite the absence of employer matching [9]