The Bolder Guide to Building Wealth

Quick note: The information in this exercise is for educational purposes only, and cannot be considered investment advice. 

Building Wealth

Step 1 - Establish Goals

Step 2 - Get Organized

Step 3 - Spend with Intention

Step 4 - Pay Yourself First

Step 5 - Stop the Debt Cycle

Step 6 - Maximize Retirement

Step 7 - Invest for Future You 

Building Wealth

We define building wealth as the ability to save for short- and long-term financial needs, from emergency savings to retirement. In this sense, wealth can be synonymous with owned financial assets, including cash savings, investments, and property. 

While there are significant gaps in income in America, the wealth gap is worse:

• The top 10% of families own 76% of the wealth, or assets in America. 
• The median Black and Latinx households own about 10% of the wealth of White households. 
• Women own 32 cents to every dollar of assets owned by men. 
• LGBTQIA+ households are twice as likely to live in poverty as cisgender heterosexual households. 

The Bolder Way

While access to financial education and income are important, we’ve unlocked the most critical determinants of an individual’s ability to build wealth: their relationship to money.

We see this every day with our clients: across all income levels and economic backgrounds, the largest potential barrier to being able to build wealth is the way a person thinks and feels about money, and the regular money moves they make (or don’t make). 

In our coaching, and throughout this guide, you’ll notice that we don’t just focus on the practical aspects of money. 

We approach money holistically, addressing the ways an individual’s unique money story, or past experiences with money, influence their financial choices today. We also focus on habits, and small, consistent steps that add up to long-term financial success. 

Let’s. Go.

Step 1 - Establish Goals

Your money goals should be specific, measurable, and reflect what you want your life to look like. So before you set numbers and dates to your goals, it’s important to dream a little. 

📝 Journal on the following question: If you could wave a magic wand and change your life, what would you do differently? At home, at work, and in your relationships? Get specific: if you can clearly define what you want, you can achieve it! 

📝 Make a list of everything you want to accomplish with your money, using the goals provided below as reference. You’ll want to include the dollar amount and which bank account you want to assign to that goal (recommendations are below). 

Recommended Goals for Financial Security

The goals listed below are in order of priority. If you have credit card debt, it’s important to prioritize your Rainy Day Fund, so that you can get out of the debt cycle and stop using your cards for emergencies. 

💸 Rainy Day Fund: $2,000 - 1 month expenses in a basic savings account. The Rainy Day Fund is a basic savings account linked to your checking, where you can access funds quickly for a small, immediate emergency. We recommend a savings account that is at the same bank as your checking and has low to no fees. 

💸 Pay Down Debt: start with high interest credit cards. You can separate your debt paydown goals to be really clear about what you’re working towards. Credit cards can be a Pay Off High Interest Debt Goal, vs. a Pay Down Student Loans Goal. In a later section, we’ll talk about balance transfers.

💸 Emergency Fund: $10,000 - 6 months earnings in a high yield savings account. The Emergency Fund is a high yield savings account where your money grows with ten times the interest of a basic savings account, and provides you with the money you'll need if you lose your income or experience a large financial emergency. We recommend the high yield savings accounts at American Express, Ally, or Marcus by Goldman Sachs. 

💸 Retirement: calculate your estimated retirement needs at AARP. Everyone needs a retirement goal, and it’s important to know what your number is so that you understand what exactly you’ll need to live off of when you stop working. For example, according to the AARP retirement calculator linked above, a woman age 35 who makes $85,000 a year will need to build a nest egg of $2 million to retire at age 65. 

💸 Investing: you’ll prioritize tax-advantaged retirement savings, but should invest beyond retirement as well. For now, just make a note of how you want to invest. Are you interested in real estate, or business investments? Just want to stick to the stock market? Whatever you want to learn, you can. 

📝 Add relevant Financial Security Goals to your goals list. Even if you’ve already done something, you may want to add it and then cross it off to remind yourself that you’re awesome. 

How to Turn Life Goals into Money Goals

Common savings goals can include home repairs, travel, a down payment on a house or car, a baby fund, a wedding fund, kid's expenses, a fund just for fun, and many more! 

🛬 First, identify what to save for. It's best to set aside a separate savings account for dedicated goals, like your emergency fund, an upcoming trip, a wedding, kids' expenses, or whatever you need or want extra funds for!

📅 Next, identify when you'll need the money. In a few months? In a few years? Get as specific as possible. 

📝 Add relevant Life Goals to your goals list.

Money Relationship Goals

We encourage our clients to set emotional goals as well as practical. Know you want to stop feeling anxious every time you check your bank account? Add it as a goal, and see how your feelings change every week as you develop money habits following the steps in this guide.

📝 Add relevant Money Relationship Goals to your goals list. 

Step 2 - Get Organized

Having all of your assets and debt listed in one place is a great way to feel organized and clear about your financial situation.

📝 Collect every account balance in one place. Use a spreadsheet, a notebook, or ask us about using the Bolder Financial Dashboard. Make sure you are also adding monthly contributions, or minimum debt payments, and any interest rates associated with the account. 

👇🏽Assign goals to each account. Every goal should have a dedicated account. You may be able to assign some of your goals to current accounts, or you may need to open additional accounts to start saving for a specific goal. 

Our simple flow-chart below can help you identify which accounts to use, or open: 

If you need to open a new account, you can select one of the recommended accounts below!  

High Yield Savings Accounts (HYSA)

(All accounts below have no fees or minimum balances)

• CapitalOne360 Performance Savings - 3.40% savings rate, can have multiple accounts for different savings goals

•  Ally Online Savings - 3.40% savings rate, can have multiple 'buckets' for different goals within one account

• Marcus by Goldman Sachs - 3.30% savings rate, able to transfer funds within the same day in an emergency

Certificate of Deposit (CDs)

• Marcus by Goldman Sachs - 4.75% annual return for an 18 month term, $500 minimum balance

• Bread Savings - 4.50% annual return on 1-5 year terms, $1500 minimum balance

• Discover - 4.30% annual return for 1-5 years, $2500 minimum balance

Step 3 - Spend with Intention

Knowing where your money is going is a HUGE part of building financial confidence and being aware + engaged with your money. It’s also the only way to find as much money as possible to put towards your goals!

💸 Download all of your transactions for the last month, and categorize them. Use a spreadsheet, a notebook, or ask us about using the Bolder Financial Dashboard. 

Here are some of the key categories we track: 

📝 Reflect on your spending by journaling your responses to the following questions: 

1. How do you feel looking at your past spending? (Check out the emotions below that we commonly hear from clients). 

2. What surprised you about your spending?

3. What do you want to change about your spending?

📝 Finally, compare your total spending to your monthly income. How much do you have left over every month to put towards your goals? If you don’t have enough left over, you’ll need to either earn more, or cut back on spending. 

Tips to cut back: 

• Look at each category of spending and think about what dollar amount you WANT to be spending in that category. Is it $200 less in shopping + personal care? $100 less in restaurants and bars? 
• Then, think about the habits you’ll need to put in place to make sticking to that dollar amount possible. Look at your triggers, or why you tend to overspend in those areas, and come up with small changes that can help you avoid overspending. 
• Our clients have had success with meal planning, less scrolling on social media, or focusing on holistic wellness instead of buying things. 

Tips to earn more

• Review your salary compared to others in your industry and prepare for a raise or promotion with your manager. 
• Take on one more client each month in your business, or expand your marketing efforts.
• Sell unused items around your home. 
• Get a remote freelancer role with sites like upwork.com. 

Step 4  - Pay Yourself First

Now that you know how much you have left over every month to put towards your goals, it’s time to get used to paying yourself first. Most Americans are used to spending as soon as a pay day comes around, but we’re going to help you develop a new habit: the Pay Day Money Date. 

💸 Set up automatic transfers each pay day, so that the first thing your money does once you get paid is build up your savings. 

📅 Create a 15-minute Pay Day Money Date event on your calendar for every pay day, and follow the process below (put this as a description on your recurring event).

How to Have a Pay Day Money Date

1. Check your balances Take a look at all of your balances (assets and debt). Any surprises? You should look into anything that doesn’t meet your expectations, to make sure no errors occurred. 
2. Replenish any savings accounts that were used. Did you have to use some of your Rainy Day Fund for a car repair, or another unexpected expense? Put some of your paycheck back into your savings before you spend it.
3. Pay off your credit card statement balances. If you use your credit cards to get points, make sure you pay off the statement balance before you do any other spending with this paycheck. This habit helps you avoid accruing more debt than you can afford to pay at once. 

If you are paying off a credit card balance over time...

4. Check on your credit card payments. Make sure you have auto pay set up for the minimum payment before the due date, and see how much extra you can pay above the minimum. 
5. Reflect on your spending.
   Make a mental note (or add a reminder or note on your phone) of the changes you want to make during this pay period.

6. Add to your goals. Even if it’s just a little bit, make sure you are adding money to your long-term goals (if you’ve automated this like we suggest, you can just do a quick check). 

Step 5  - Stop the Debt Cycle

Don’t have a credit card problem? Move on to Step 6. 

Everybody else, we’ll focus on two critical steps: 

i. Consolidate debt

ii. Stop debt buildup 

With any debt consolidation option, it fixes the issue of high interest charges and multiple payments, but does not fix the root cause of the debt, which could be things like overspending and inability to save for upcoming purchases or life events. 

Any effective debt management plan needs to include coaching around these areas as well to avoid repeating a debt cycle. We've got your back! 🤗 

i. Consolidate Debt 

If you have credit card debt, the interest you pay each month could be as high as 20-30%, making debt payoff much slower (and more expensive) than you ever imagined. 

But there could be a way to save! Here are debt consolidation options that could help you pay down your credit cards faster💸

👉🏾 First, check your credit score for free at freecreditreport.com. 

Consolidating your debt usually requires a credit score that is at least 'good' (670 or above).

If your credit score is lower than 670, work to pay down your debt by choosing one of the three strategies below: 

Snowball - focus on paying down debt with the smallest balance, then put those payments towards the next smallest, until all debt is paid off. 

Avalanche - work on paying down the balance with the highest interest rate, to save on interest that accumulates on your debt. 

Emotional - pay off the debt that makes you feel worse, first. That emotional baggage is impacting your other money moves! 

📝 If your score is high, decide if a Balance Transfer Credit Card is a safe option for you. A balance transfer credit card offers a 0% interest rate on new balances transferred to the card, but that rate expires within a certain timeframe (usually 12-18 months), at which point the interest rate will jump up to as high as 18-25%. A fee of 3-5% will apply.

⚡To decide if a balance transfer card is okay for your situation, ask yourself these two questions: 

1. Can I fully commit to paying off the balance transfer card within the promo period? The minimum required monthly payment will likely not get you to paying off the balance in full before the promo period ends, so that you'll be hit with interest charges after the 12 or 18-month promo period. Therefore, you'll have to commit to making higher payments every month (and sticking to it) in order to pay off your balance in full before the promo period ends.

2. Can I commit to NOT using the new credit card if there's room available on it? Oftentimes, a balance transfer offer includes a 0% introductory interest rate on the transfer but NOT on any purchases made, which could be charged as high as 24.99% interest.

If you answered no to either of the questions above, a personal loan or consolidating with Tally might be better for you! See below for details. 

💪🏽 Now choose your path below, and take action!

Consolidate Debt with a Balance Transfer

Transfer existing credit card debt to a new card that offers 0% introductory interest rate for 12-18 months, and usually a small fee (3-5%) on the balance transferred

👉🏽 Calculate how much a balance transfer could save you in interest, and how much you should pay monthly to pay it off in full by the end of the promo period: Balance Transfer Calculator.

Consolidate Debt with a Personal Loan

Take out a loan to consolidate debt into one monthly payment and a lower interest rate than you are currently paying. You'll have a fixed interest rate, which will depend on your credit score, and a fixed monthly payment. 

Some lenders charge fees for processing your new loan, up to 6% of the balance. This fee may be wrapped up into the loan amount, meaning you'll pay interest on it as well.  You may also be subject to a prepayment penalty if you want to pay off the loan early. Read the fine print before accepting a loan offer!

👉🏽 Calculate how much a personal loan could save you in interest: Debt Consolidation Calculator

Consolidate Debt with Tally

Don't want to get another credit card, and want to avoid the fees of a personal loan? Tally can give you access to a lower interest line of credit, getting you out of debt much faster and saving you over the repayment period. Not everyone is eligible, but it doesn't hurt your credit to check the rate you would be eligible for with them.

You can learn more about how Tally works here.

ii. Stop Debt Buildup

Be honest with yourself about what you need! First, decide what level below makes sense for you, then choose an option to stop the debt cycle.

Level 1 - Take steps to avoid using credit cards

Some ideas (start with 1 or 2 if you feel overwhelmed): 

1. Remove your stored card info from your favorite online stores and apps (yes, even Apple Pay and Amazon, if necessary).
2. Carry cash with you or only your debit card.
3. Decide which categories of spending you’ll use cards for, like groceries or travel, and stick to it!
4. Decide WHICH card you will use, and which ones you will STOP using (see below).
5. Move all auto-payments to your checking account until you can successfully avoid building up balances to be more than you can afford to pay off each month.

Level 2 - Get rid of your credit cards

1. Cut up your credit cards or put them in a shredder.
2. Note: If you decide to physically destroy your cards, think about if there is one credit card (lowest interest ideally) that you can lock up or freeze in case you desperately need it!Lock credit cards away in a place that is inconvenient to access, like a safe.
3. Put them in the very back of your freezer, behind the popsicles you never actually eat. Yes, really.

Important Note: Try NOT to close your credit card accounts! This can lower your credit score by reducing the average age of your accounts and raising your credit utilization ratio.

Recap - Building Wealth Steps 1-5

Step 6 - Maximize Retirement

The information in this exercise is for educational purposes only, and cannot be considered investment advice. 

Saving for retirement is a critical piece of building wealth. In general, retirement savings are usually your first introduction to investing, and can grow significantly more than what you have in basic or high yield savings accounts, for a few reasons: 

1. Retirement savings are invested, which means they grow with the return of stocks, bonds, or mutual funds (based on your investment choices). Like any investments, retirement savings are subject to loss. 
2. Returns are cumulative, so if you start investing early enough, your total investment balance at retirement could be triple the amount you actually put in (depending on your investment choices).

Image below shown for educational purposes only.

3. Retirement savings are tax advantaged depending on the type, they may be tax-deferred (taxed later, not now) or tax-free growth (taxed now, but not later). Contributions to your retirement account can also reduce your taxable income and reduce the taxes you pay. 

Maximize your 401k 

Your 401k or employer retirement plan is the easiest way to start investing for your future. It has a much higher contribution limit than a retirement account you open on your own, and your employer may also contribute to it. 

📝 Choose which phase below makes the most sense for you right now, and make sure your automatic contributions are set. You can usually do this by logging into your retirement benefits portal, or asking for help. 

Phase 1 - contribute enough to get the employer match. (ex. if your employer matches 50% of your contributions up to 6%, that means you need to contribute at least 6% to get the full match). 

Phase 2 - contribute 10-15% of your gross income as your salary grows.

Phase 3 - contribute up to the annual contribution limit, which is $22,500 for 2023. 

Whichever phase you’re starting in is okay! Remember to increase your contribution percentage every year as your income grows. 

Maximize your IRA

An IRA (individual retirement account) is a tax-advantaged retirement account owned by the individual (you), with lower contribution limits than a 401k ($6,500 per year for 2023).

Traditional (pre-tax contributions) and Roth (post-tax contributions) accounts are available, as shown below:

📝 Decide how much to contribute to your IRA:

If you are not already contributing to a workplace retirement plan, figure out the maximum possible amount you can contribute to your IRA, without hitting the limit. For 2023, the maximum annual contribution is $6,500, so this would be $541 per month.

If you are already contributing to a workplace retirement plan, and don’t have money left over, that’s okay. Your priority is to make sure you are getting the employer matching contribution to your workplace plan, and then see if you can find an extra $25 a month to contribute to your IRA. You’ll increase this amount as you earn more! 

📝 Open Your Account

If you are ready to open a personal IRA or Roth IRA, you can do so at almost any brokerage firm. If you already have old accounts, equity accounts or other retirement accounts at a firm i.e. Fidelity, Wealthfront, Schwab, it may be best and easiest to just open your IRA there as well.

Maximize Your Health Savings Account (HSA)

While this isn’t technically a retirement account, it can be. Your HSA contributions are tax-free, and your account grows tax-free, and any withdrawals for medical expenses are tax-free. If you don’t use your HSA, you can withdraw it for any reason at retirement without tax penalty. 

If you have a high deductible health plan, your employer likely offers an HSA. Check with them, and then make a plan to contribute to the limit ($3,850 for individuals and $7,750 for families for 2023 - plus an extra $1,000 for anyone age 55 or older). 

Step 7  - Invest for Future You

The information in this exercise is for educational purposes only, and cannot be considered investment advice. 

The wealthiest people in the world have most of their money in financial assets, like stocks, bonds, real estate and other property. While they have liquid funds, like savings accounts (which you’ve built, or are working on), to protect them in emergencies, they have the majority of their money in investments because of the growth they experience over time. 

It’s a myth that you have to be an investment expert in order to reap the rewards of earning money through investments. Anyone can start with as little as $1, and you can start small and increase your investment contributions over time as your confidence grows. 

What is Investing?

When you invest, you transfer your money into a brokerage account, which is a financial account that is licensed to buy or sell securities, or assets. Once your money is in the brokerage account, you then decide which securities to purchase, on your own, or with the help of a financial advisor or robo-advisor.

📝 Choose how you’d like to invest below, then follow the steps to get started. 

Self-Directed: managed by you 

An online self-directed platform is best for investors who want to be more hands on, and do research about the market and their portfolio.

Self-Directed brokerages include apps like Robinhood and Acorns, or online platforms like  E*Trade. Many platforms offer low to no fees.

⚡Pros: control, low fees, research tools

⚡Cons: time and energy to manage your account and rebalance

⚡Best for: seasoned investors who want to put more time and energy into their portfolio and do not want to pay many fees

Opening a self-directed brokerage account shouldn’t take more than 15 minutes. It’s rather simple, so follow the steps below to get started!

Choose your DIY brokerage

Don’t sweat over choosing the exact right brokerage for you. If you google “best online brokerages for beginners,” you’ll get a list that includes some of the ones shown below, which all have several things in common:

• low to no fees
• no minimum to get started
• benefits for signing up, like a free stock (Robinhood)
• good customer service
• favorable customer reviews

Start with one of these below, see which one you like best, and get opening!

• Robinhood (no fee, no min, get a free stock when you sign up)
• AllyInvest (no fee, no min)
• E*Trade (no fees for beginner trades, no min)

Robo-advisor: managed for you 

Robo-advisors use technology to select investments and manage your portfolio for you.

In most cases, you answer some questions about your risk appetite, what goals you are saving for, and what industries or funds are appealing to you, and the robo-advisor does the rest! Many robo-advisors offer low to no fees.

⚡ Pros: minimal effort, low fees, higher than average returns

⚡ Cons: not personalized investments or service

⚡ Best for: beginning investors building their portfolio

Opening a robo-advisor account shouldn’t take more than 15 minutes. It’s rather simple, so follow the steps below to get started!

Choose your Robo-Advisor

Don’t sweat over choosing the exact right robo-advisor for you. If you google “best robo advisors for beginners,” you’ll get a list that includes some of the ones shown below, which all have several things in common:

• low fees
• no minimum to get started
• good customer service
• favorable customer reviews

Start with one of these below, see which one you like best, and get opening!

• Betterment ($10 min to start, 0.25% mgmt fee unless balance under $20k, then $4/month)
• Acorns (no minimum to start, $3-5/month fee)
• Wealthfront ($500 min to start, 0.25% mgmt fee)

Financial Advisor: managed for you

(if you prefer a human to meet with and have funds over $100,000 to start)

If you are starting with over $100,000 to invest at once, and you really want to meet with a person about your investment choices, you may want to talk to a financial advisor, who will help you choose what securities to invest in and manage your portfolio going forward, in exchange for a fee.

⚡ Pros: minimal effort, personalized investments and service, higher than average returns

⚡ Cons: high fees, assets under management (AUM) requirement may disqualify you

⚡ Best for: beginning investors with significant funds to invest

Whichever platform you choose will likely come with education around your investing options. If you’d like an in-depth investment education, talk to a Bolder money coach for help. Bolder Money Coaches are not financial advisors, and only provide investment education, not advice about specific investments. 

About Bolder Money

‍

Bolder Money provides personalized coaching and guidance around money to those who have historically been left out of standard financial help. They welcomed their first founding members in summer of 2021, and have helped them not only grow their net worth, but also their financial confidence to lead the lives they want. 

Determined to reduce economic inequality, Bolder believes that everyone deserves the opportunity to improve their financial situation, and participate in building wealth regardless of their background, their gender, race, or how much they currently make or have in savings. 

Bolder’s clients describe their experience as the first time they realized money didn’t have to feel intimidating, or that getting affordable, effective financial help was possible for them.