This post originally appeared on LearnVest.
Chances are you’re familiar with the food pyramid.
You know, the one you learned about in elementary school, with the pyramid-shaped stack of foodstuffs.
Well, we thought that a financial pyramid could be even more helpful to keep tacked to your fridge because while there’s much debate over the healthiest diet—vegan? paleo? macrobiotic?—the building blocks in this money pyramid should remain consistent throughout your life.
So take a look at our nifty pyramid—and consider maybe even reviewing it with your own elementary school student. The USDA ain’t got nothin’ on this!
Building-Block One: Emergency Fund, Paying Off Bad Debt,Retirement Savings
Before it was updated in 2005, the original food pyramid advised people to consume lots of bread, pasta and crackers every day … hmm, maybe not. But when it comes to your financial foundation level, we think everyone can agree that before you do anything else with your extra cash, you should diligently (and consistently!) put money into an emergency fund, pay off bad debt (read: credit cards and personal loans) and start saving for retirement. In other words, less pasta, more awesome-sauce.
Building-Block Two: Insurance, Paying Off Good Debt
An apple a day may keep the doctor away … but not forever. Financial catastrophe can come in the form of appendicitis, an apartment fire or a car accident. Suddenly, you could find yourself dipping into your emergency fund—or throwing a couple thousand on a credit card. There goes all of your hard building-block one work! Unless, of course, you have insurance. It goes without saying that health insurance is crucial, but you might also benefit from renter’s, life, disability and long-term care insurance.
