version: "1.0.1"
name: finance description: >- Personal finance planning — 5-pillar framework (cash flow, net worth, debt, emergency fund, investing), tax optimization, insurance review, retirement planning (FIRE, 4% rule, Mega Backdoor Roth), and document retention. license: MIT compatibility: opencode metadata: workflow: finance audience: personal version: "3.0.0" triggers:
- create a budget
- track spending
- plan debt payoff
- review investments
- optimize taxes
- organize financial documents
- get a financial plan
- retirement planning
- how much to save
- emergency fund
- net worth
negatives:
- stock trading advice
- cryptocurrency speculation
- day trading strategies
- options trading
- individual stock picks
Disclaimer: Educational financial planning information. Not professional financial advice.
Workflow
Follow in order. Skip pillars already covered.
1. Assess Cash Flow
- Calculate real monthly income (take-home after taxes, insurance, retirement)
- Track expenses for 30 days
- Classify into Needs (50%), Wants (30%), Savings (20%)
- Identify surplus or deficit
2. Calculate Net Worth
- List all assets (cash, investments, property, retirement accounts)
- List all liabilities (credit cards, loans, mortgage, student debt)
- Net Worth = Total Assets - Total Liabilities
- Track monthly — direction matters more than the number
3. Eliminate High-Interest Debt
- List all debts with balance, rate, minimum payment
- Choose avalanche (highest rate first) or snowball (smallest balance first)
- Attack with surplus from cash flow
- Debt is emergency if total > 6 months income OR rate > 10%
4. Build Emergency Fund
- Phase 1: $1,000 or 1 month (starter)
- Phase 2: 3-6 months of essential expenses (full)
- Phase 3: 6-12 months (conservative / irregular income)
- Keep in HYSA only. Never invest it.
5. Invest for Retirement
- 401(k) up to employer match → free money
- HSA (if eligible) → triple tax-advantaged
- IRA (Roth or Traditional) → $7,000/yr ($8,000 if 50+)
- 401(k) up to max ($23,500)
- Taxable brokerage → no limits
5-Pillar Framework
1. Cash Flow → Income - Expenses = Surplus
2. Net Worth → Assets - Liabilities = Net Worth
3. Debt → Avalanche or Snowball
4. Emergency → 3-6 months essential expenses in HYSA
5. Invest → Tax-advantaged accounts first
Pillar 1: Budgeting
50/30/20 Rule
| Category | % | Includes | |
|---|
| Needs | 50% | Housing, utilities, groceries, insurance, minimum debt, transport | |
| Wants | 30% | Dining, entertainment, subscriptions, travel, shopping | |
| Savings | 20% | Emergency fund, retirement, investments, extra debt | |
Budgeting Methods
| Method | Best for | |
|---|
| 50/30/20 | Beginners | |
| Zero-based | Detail-oriented | |
| Envelope | Overspenders | |
| Pay-yourself-first | Savers | |
Pillar 2: Net Worth
- Track monthly via spreadsheet or app
- Direction > absolute number
- Milestones: $0 → 3 months expenses → 1x income → 10x income
Pillar 3: Debt Payoff
| Strategy | Approach | Best for | |
|---|
| Avalanche | Extra to highest interest rate | Mathematically optimal | |
| Snowball | Extra to smallest balance | Psychological wins | |
Debt is emergency if: total > 6 months income OR interest rate > 10%
Pillar 4: Emergency Fund
| Phase | Amount | When | |
|---|
| Starter | $1,000 or 1 month | While paying off debt | |
| Full | 3-6 months essential expenses | After debt free | |
| Conservative | 6-12 months | Irregular income, self-employed | |
Where: High-yield savings account (HYSA). Never invested.
Pillar 5: Investing & Retirement
Account Contribution Hierarchy
- 401(k) up to employer match → free money, do this first
- HSA (if eligible) → triple tax-advantaged
- IRA (Roth or Traditional) → $7,000/yr ($8,000 if 50+)
- 401(k) up to max → $23,500/yr
- Taxable brokerage → no limits, less tax-advantaged
2026 Contribution Limits
| Account | Limit | |
|---|
| 401(k) elective deferral | $23,500 ($31,000 with catch-up 50+) | |
| IRA | $7,000 ($8,000 catch-up 50+) | |
| HSA (individual) | $4,300 | |
| HSA (family) | $8,550 | |
| HSA catch-up (55+) | $1,000 | |
| Mega Backdoor Roth (after-tax 401k) | $69,000 total (incl. employer) | |
3-Fund Portfolio
- US total market (VTI / FSKAX): 60-70%
- International (VXUS): 20-30%
- US bonds (BND / FXNAX): 10-20% (age - 20 = bond %)
Target expense ratio: 0.03-0.07%. Rebalance annually.
Savings Benchmarks (Fidelity)
| Age | 30 | 35 | 40 | 45 | 50 | 55 | 60 | 65 | |
|---|
| 1x salary | 2x | 3x | 4x | 5x | 6x | 7x | 10x | |
Withdrawal Rules
- 4% rule (25x annual expenses) — traditional retirement
- 3-3.5% for early retirement / longer horizons
- RMDs start at age 73 (SECURE 2.0)
Mega Backdoor Roth
- Check if 401(k) allows after-tax contributions + in-plan Roth rollover
- Contribute up to $69,000 - $23,500 (elective) - employer match = after-tax capacity
- Request in-plan Roth rollover (automatic if plan supports it)
- Growth on after-tax is taxable if not rolled over promptly
Pro-rata rule does NOT apply to 401(k) after-tax → Roth conversions
Backdoor Roth IRA
- Contribute $7,000 to Traditional IRA (non-deductible)
- Convert to Roth IRA
- Pay tax only on earnings between contribution and conversion
Pro-rata rule: if you have other Traditional IRA balances, conversion is partially taxable
Fix: roll Trad IRA into 401(k) before converting
Tax Optimization
| Strategy | Impact | |
|---|
| Max HSA ($4,300 / $8,550) | Triple tax-free | |
| Max Trad IRA deduction | Reduces AGI | |
| Tax-loss harvesting | Offset gains + $3,000/yr income | |
| Mega Backdoor Roth | After-tax → Roth, up to $69,000 | |
| Health insurance (self-employed) | Above-the-line deduction | |
2026 Standard Deduction (estimated)
- Single: ~$15,000
- Married filing jointly: ~$30,000
- Head of household: ~$22,500
Itemize only if deductions exceed standard.
Insurance Check
| Type | What to check | |
|---|
| Health | Deductible, OOP max, HSA eligibility | |
| Auto/Home | Liability ≥ $300K, umbrella if NW > $500K | |
| Life | Term only (never whole/universal). 10-12x income, 20-30yr term | |
| Disability | Own-occupation, covers 60% income | |
Financial Document Retention
| Document | Keep | |
|---|
| Tax returns + supporting docs | 7 years | |
| W-2s | Until Social Security claimed | |
| Bank/credit card statements | 1 year (unless tax-related) | |
| Investment statements | Until sold | |
| Real estate closing | Until sold + 7 years | |
| Estate docs (will, trust) | Permanent | |
| Loan documents | Until paid + 7 years | |
Error Handling
| Scenario | Cause | Mitigation | |
|---|
| Negative cash flow | Budget > income | Cut wants first, then needs; increase income | |
| Emergency fund not growing | No budget surplus | Revisit 50/30/20; automate transfers on payday | |
| Debt increasing despite payments | Interest outpaces principal | Avalanche to highest rate; consider consolidation | |
| Investment losses panic | Market volatility | Rebalance annually, not on news; stay the course | |
| Backdoor Roth pro-rata tax | Traditional IRA balance exists | Roll Trad IRA into 401(k) before converting | |
| HSA ineligible | HDHP not satisfied | Verify HDHP minimums; switch plans at open enrollment | |
| Tax bill surprise | Underwithheld | Adjust W-4; make estimated quarterly payments | |
Production Checklist
- [ ] Income: calculated take-home (not gross)
- [ ] Expenses: tracked for ≥ 30 days
- [ ] 50/30/20: verified categories add up
- [ ] Net worth: baseline recorded
- [ ] Debt: all debts listed with rates and minimums
- [ ] Strategy: avalanche or snowball chosen
- [ ] Emergency fund: at least starter phase in HYSA
- [ ] Retirement: 401(k) match captured
- [ ] HSA: maxed if eligible
- [ ] IRA: funded for current year
- [ ] Asset allocation: 3-fund portfolio set
- [ ] Insurance: life, health, disability, auto/home reviewed
- [ ] Tax: withholding checked, prior year return reviewed
- [ ] Documents: retention schedule applied
Anti-Patterns
| Anti-pattern | Fix | |
|---|
| Budgeting every dollar without buffer | Leave 5-10% buffer for variable expenses | |
| Investing before emergency fund | 3-6 months in HYSA first | |
| Whole life insurance | Term life only. Invest the difference. | |
| Timing the market | Time in market beats timing the market | |
| No tax diversification | Mix of pre-tax, Roth, and taxable accounts | |
| Credit card debt as normal | Pay in full every month | |
| No will / estate plan | Everyone needs will + healthcare directive + POA | |
| Chasing returns / stock picking | 3-fund index portfolio, rebalance annually | |
| Over-insuring (multiple whole life, annuities) | Term life + umbrella only | |
| Keeping too much cash (outside emergency fund) | Invest surplus beyond 6-12 months expenses | |
Sources
- IRS Publication for contribution limits 2025-2026
- Fidelity retirement savings benchmarks
- Bogleheads — 3-fund portfolio
- SECURE 2.0 Act provisions
- Kitces.com — Backdoor Roth, Mega Backdoor, tax strategies
- Morningstar — SWR research
Checklist
- [ ] Skill loads without errors in the AI agent
- [ ] YAML frontmatter is valid (description, compatibility, audience)
- [ ] Workflow section provides clear step-by-step instructions
- [ ] Error handling section covers common failure modes
- [ ] All referenced files (references/, scripts/, assets/) exist
- [ ] Skill triggers correctly for intended use cases
- [ ] No broken links or missing resources