Aug 31, 2020
The Stash Way: Stash’s Complete Framework to Help You Achieve Financial Wellness
Spend less than you earn, invest, and make a financial plan.
Getting smart about money can feel like a big task, but Stash is here to help!
Life hands us daily challenges that require spending our hard-earned cash. Meanwhile, the financial world is filled with so many confusing terms and concepts. And today, more than ever, there’s a lot of uncertainty about the future. Nearly 140 million people in the U.S. struggle with at least some of the financial basics, meaning they may not have access to the education, resources, and planning tools that can make them financially healthy.
That’s why we’ve created something called the Stash Way. It’s our guide to helping you achieve financial wellness, encompassing smarter budgeting and saving, a diversified approach to investing, as well as planning for the future with retirement accounts and insurance.
It translates into six financial objectives :
✅ Spend less than you earn.
✅ Pay bills on time.
✅ Save cash for emergencies.
✅ Invest regularly.
✅ Diversify and think long-term.
✅ Insure your assets and yourself.
Each step of the Stash Way is designed to help you manage some of the biggest pain points that consumers face when it comes to their finances, based on research from the Financial Health Network (FHN). FHN, a not-for-profit association of more than 160 financial services, policy, and consumer advocacy organizations, including Stash, is dedicated to helping ordinary and underserved people build a strong financial foundation and achieve financial wellness.
We’ll do a deeper dive into each topic in other articles, but briefly here’s a bit more about each component of the Stash Way:
Spend less than you earn
At Stash, we believe the first step to taking control of your finances is having a clear picture of how much money you have coming in as income, and what you have going out as expenses each month. A budget can help you make sure you’re not spending more than you earn. There are numerous types of budget you can try, or you can feel free to create your own.
And you need to get a handle on what you spend, because probably the most important financial goal for everyone when they start planning their financial lives is saving.
Pay your bills on time
Paying your bills on time goes hand-in-hand with building a budget. Make sure you include your bills as part of your monthly essential expenses so that you’ll pay them on time each month and not get behind on payments.
Staying on top of your bills can insure that you maintain a good credit score, which measures how well you manage your debt.
Save for the unexpected
You’ve probably heard the expression, “pay yourself first.” That simply means saving a portion of your income as you receive it. For most of us, that’s through weekly or bi-weekly paychecks. For many others, for example those who work in the gig economy, pay may be more sporadic, but you can still think about taking a portion of each paycheck and devoting it to savings.
Saving for the unexpected requires different saving strategies and different plans for your money. At Stash we encourage users to create two different kinds of funds. One is called your rainy day fund, and it can be used for short-term unexpected things as they arise. The other is your emergency fund, and it’s for bigger unexpected expenses, such as loss of a job, large medical expenses, or something else of that nature.
Invest regularly, diversify, and invest for the long-term
If you can, start to invest in the stock market. Investing for the long term can help you take advantage of something called compounding, which is an echo effect that saving and investment earnings can both have. And regular investing can help you get a better price experience when purchasing securities such as stocks and bonds.
Diversification means you’re not putting all of your eggs in one basket, so you can better weather the stock market’s ups and downs. That means you won’t put all of your money in too few stocks, bonds, or funds.
When thinking about long-term investing, it’s also important to consider retirement planning, which can include putting money into accounts such as a Roth or traditional IRA.
Insure your yourself and your assets
Budgeting, saving, and investing are building blocks that let you tackle the final goal of the Stash Way, which is insuring yourself and your family.
Having the right insurance can help you stay on track financially, and it can be crucial to making sure you, your loved ones, and your property are protected from the impact of unexpected events like death, an accident, or an injury.