Taking the First Steps on the Path Toward Financial Independence

By Sean Schmid


Benjamin Franklin once said, “An investment in knowledge pays the best interest,” and that certainly holds true when it comes to finances. Learning how to make the most of the money you’ve got, and planning so that it will work for you in the future, is an important step in reaching financial independence.

But even before you start saving for college or investing for retirement, it pays to lay a firm foundation in financial fundamentals: credit, debt, budgeting and saving. Here are the top things you need to know.


Credit scores rate the creditworthiness of a person and are used by lenders, landlords, and more. A “good” credit score is 700 or above. Checking your credit report, and correcting any inaccuracies you might find there, is important. People with better credit scores often receive better rates on everything from car loans to mortgages.

  • The three primary credit reporting agencies are Equifax, Experience, TransUnion.

  • The Fair Credit Reporting Act entitles you to one free credit report per year from each credit bureau.

  • To obtain yours, visit , the only authorized website for free credit reports, or call 1-877-322-8228. You will need to provide your name, address, social security number, and date of birth to verify your identity.


The average U.S. household is carrying $15,654 in credit card debt1. Getting out of debt is the first and most important step towards financial freedom. It may seem overwhelming, but it can be done. Here’s how to get started.

  • Save $1,000 in cash to start an emergency fund. Put it in the bank and do not touch it.

  • List your debts, including total amount owed, interest rate, and minimum payment.

  • Start by paying off the most expensive (largest interest rate) debt first. Pay more than the minimum each month – paying the minimum only prolongs your payoff plan.

  • Once that debt is paid off, take the amount you had been paying to that debt and apply it to the second-most expensive debt. Continue until paid off.


Every day, we make choices about when, where and how to spend our money. These choices significantly affect our financial lives. Making a spending plan (budget) for each month helps us make better choices for the long term. Here are eight steps to better money management.

  • Write down your goals and objectives.

  • Credit a spending plan (budget).

  • Keep good records.

  • Stay insured.

  • Stay focused.

  • Save more.

  • Educate yourself.

  • Set aside time to work on your money management

To create a budget, see if your bank has money management tools available through its online banking system. Many, including Penn Community Bank, do. If not, you can find a free budget template here: http://financialexcellence.net/wp-content/uploads/2009/12/Cash-Flow-Planning-Sheet.pdf


Once you have plotted out your basic spending, readjust your budget to aim for the 20-30-50 ratio of spending:

  • 20%: immediately saved for goals/retirement

  • 30%: Maximum spent on housing

  • 50%: Spent on everything else

Saving in the short term also should build toward saving for the long-term, i.e. retirement. Here are seven principles for a successful retirement:

  • Create the plan you need for the retirement you want

  • Plan for a long life

  • Make an informed decision about Social Security

  • Know what to expect with health care costs

  • Use time to your advantage

  • Minimize taxes to maximize your retirement

  • Don’t spent too much or invest too conservatively

Penn Investment Advisors, Inc.





Investment advisory services and securities are offered through Penn Investment Advisors, Inc. (PIA), a Registered Investment Advisor.  Penn Investment Advisors, Inc., is a wholly-owned subsidiary of Penn Community Bank (Bank). Penn Investment Advisors, Inc., does not offer or provide legal or tax advice. Please consult your attorney and/or tax advisor for such services. The products offered by Penn Investment Advisors are not insured by the FDIC, the NCUA or any other agency of the government, are not deposits or other obligations of the Bank or guaranteed by the Bank and involve investment risks, including possible loss of principal amount invested.

1 https://finance.yahoo.com/news/average-us-household-owes-15654-credit-card-debt-171830579.html