What is the first step in the Five Foundations?

The first step in the Five Foundations is to establish a $500 emergency fund. This initial fund serves as a crucial financial safety net that provides a buffer against unexpected expenses or emergencies, such as car repairs or medical bills. By having this small amount saved, individuals can avoid going into debt when unforeseen costs arise, thus promoting healthier financial habits.

Creating this emergency fund sets the stage for more advanced financial goals, as it allows individuals to address financial emergencies without disrupting their budget or relying on credit. After forming this foundation, individuals can then focus on other steps, such as paying cash for college, getting out of debt, and building wealth. Having that initial financial cushion is essential for achieving stability and confidence in one’s overall financial journey.