1. Save at least 10% of your annual income 
Begin saving to build a liquid cash reserve. Once you have achieved sufficient liquidity, direct savings toward balancing and building your portfolio. Savings also include retirement plan contributions. 

2. Have sufficient liquidity 
Most wage earners should have 10% of their annual income in a primary cash reserve (A1) and another 20% in a secondary reserve. Self-employed and retired individuals should build their cash reserves to an even greater level. 

3. Fully fund your pensions 
Take advantage of tax deferred savings plans, especially if your employer matches contributions. 

4. Have the right size house 
For most middle income Americans, your home is the most significant investment you will ever make. Buy a home 2 or 2 1/2 times your annual income, with a mortgage of 50% or more of its value. If the value of the home reaches 100% to 125% of your income, sell it and trade up again. 

5. Pay off all credit cards and consumer debt 
Learn the difference between bad debt, good debt, and acceptable debt. Avoid the bad, use the acceptable debt wisely, and take advantage of the leverage of good debt. 

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