My children are growing up quickly. Our youngest is now in high school, and our oldest heads off to college this fall. Before long, they will be earning money, paying bills, choosing employee benefits, opening investment accounts and making financial decisions of their own. They could benefit from some good advice, and I hope they never hesitate to ask.

But this got me thinking – could I create a ‘pocket version’ of what I’ve learned that they could carry with them? A kind of starter kit for someone just beginning their wealth journey? So I gave that a try and came up with this:

• If you want to improve something, the first step is to measure it. Create a personal balance sheet listing everything you own and everything you owe. The difference is your net worth. While your financial well-being cannot be reduced to a single number, your net worth is an important yardstick of your progress. Update it periodically. It will not increase every month or every quarter, particularly when financial markets decline or an unexpected expense arises. Over longer periods, however, it should go up.
• Build a solid financial foundation first before worrying about more sophisticated strategies. Keep approximately three to six months of living expenses in a safe and readily accessible emergency fund. That money is not intended to earn an impressive return, but rather to prevent a temporary setback—such as a job loss, medical expense or major home repair—from becoming a lasting financial problem.
• At the same time, do not accumulate substantially more cash than you are likely to need. Cash feels safe, but inflation gradually erodes what that money can purchase. Over several decades, that loss of purchasing power can be significant.
• Learn to distinguish between assets that support your lifestyle and assets that build wealth. Cars, furniture and electronics may be useful or enjoyable, but they generally decline in value. Productive financial assets—such as ownership interests in profitable businesses—have the potential to generate income and appreciate over time.
• One of the most effective financial habits is also one of the simplest: arrange for money to move automatically from each paycheck into retirement and investment accounts. Automation removes the need to make the same decision every month.
• Increase the amount you save whenever your income rises. It is much easier to direct part of a new raise toward savings before you become accustomed to spending it. Otherwise, expenses tend to expand along with income—a phenomenon commonly known as ‘lifestyle creep’.
• Have a plan. Begin investing as early as possible, while time is on your side and compounding has decades to work its magic. Fortunately, successful investing does not require you to predict the future, and you do not need to guess which stock, industry or country will perform best next year. Patience, diversification, and disciplined behavior will matter far more. Let financial markets and the power of compounding do most of the work for you.
• Build a globally diversified portfolio using low-cost index funds or similar investments. Spread your investments across the major global equity markets instead of concentrating everything in the United States or in whichever part of the market has recently performed best. Rebalance now and then when things get out of whack. But most of the time, ignore the financial headlines and do nothing.
• Remember that successful investing is slow, methodical and often pretty boring. If you want excitement, go to a casino (but don’t expect to make money there!)
• Pay attention to costs. Investment expenses and management fees compound over time just as returns do—only in the opposite direction.
• Taxes will probably be one of your largest lifetime expenses. Many are unavoidable, and paying taxes is part of living in a functioning society. But there is no reason to pay more than the law requires. Sometimes, paying a little more in taxes now can save considerably more in the future.
• Debt is not inherently good or bad; it is a financial tool. Used prudently—for education, a reasonably priced home or another investment in your future—it may help you build long-term wealth. Used to finance a lifestyle you cannot afford, it can become ruinous. If you have several debts, focus on paying off the highest rate debt first.
• Insure against risks that could seriously disrupt your financial life. Health, disability, homeowners, automobile and liability insurance can protect against losses that would otherwise be difficult or impossible to absorb. Life insurance is important mostly when other people depend on your income. Always ask yourself if the insurance you’re buying would fix a potential future problem that money can solve.
• Finally, remember that money is a tool rather than an end in itself. The goal is not simply to accumulate the largest possible account balance. Financial security gives you choices: the ability to leave a bad job, help someone you care about, withstand an unexpected setback, to do work you care about, or retire comfortably. People and your relationships with them are more important than any amount of money.

Disclosure: The opinions expressed herein are those of Elevate Wealth Advisory (“EWA”) and are subject to change without notice. EWA reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. This should not be considered investment advice or an offer to sell any product.  Past performance is no guarantee of future results.  This contains forecasts, estimates, beliefs and/or similar information (“forward looking information”).  Forward looking information is subject to inherent uncertainties and qualifications and is based on numerous assumptions, in each case whether or not identified herein.  It is provided for informational purposes only and should not be considered a recommendation to buy or sell securities or a guarantee of future results.  EWA is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about EWA, including our investment strategies, fees and objectives can be found in our ADV Part 2, which is available upon request.