Is Your Financial Planning Pyramid UPSIDE DOWN?

Updated: Oct 15, 2020



I have seen too many YouTube videos and articles from other "financial advisers" that seem to promote this financial planning pyramid. Here's their recommendations and why in a nutshell:

1. Have bank emergency savings Why? In the event of an emergency, you don't have to put any new debt on a credit card. How much? They typically recommend about 6 months for an emergency fund.

2. Term life insurance. Why? Just in case you pass away during your working years, the benefit can be paid out... but minimize your payments because we want you to pay off your debt (#3) and save in other investment accounts (#4-5).

3. Debt Elimination. Why is this after obtaining term life insurance? Because if you don't have insurance, your debt issues *may* be cleared up (or not), but your family will still be needing money. However, most people do cite credit card debt as being one of the largest hindrances to their long-term savings plans.

Forbes: New Report Shows Credit Card Debt is Hindering 401(k) Savings

4. 401(k) Maximization. Most advisers go straight to contributing to a 401(k) because you can "get the free money" in the company match. After all, it's "more money", rig