5 of Your Key Milestones
We all procrastinate, we all wonder where to start, we all need the same advice. Just Start with a simple goal. Go to Number 1 and see if you can keep focused to get going in the right direction.
- Start an Emergency Fund
As French author Francois de la Rochefoucauld once said, “The only thing constant in life is change.” Life is full of unpredictable and unexpected surprises. Often, these surprises can be quite costly. Whether you lose your job, break your arm, or your kitchen floods, it is important to have a fund set aside to be ready for the endless curveballs that life can throw at you. Start by building it to $1000 dollars, and the goal is to eventually build it large enough to cover three to six months’ worth of household expenses.
- Pay off All Debt, Including Your Student Loans
Make a list of all your debts and list them in order of priority. First, figure out what your good debt is, and what your bad debt is. Student loans and mortgages are considered good debt because they can help boost your financial position. However, debts such as credit debt and personal bank loans are considered bad debt because they do not improve your financial position. Tackle bad debt first. In addition, its best to pay off the debts with the smallest balances first. If two debts have similar payoffs, then tackle the higher interest rate debt first.
- Invest 15% of Household Income into Retirement
Once you have no payments and at least $1000 in an Emergency Fund, it’s time to start seriously thinking about retirement. The earlier you start to invest, the more compound interest works in your favor, so it is important to avoid procrastinating and get started as early as possible. The 401(k), a Roth IRA, and a Traditional IRA are just some of the many accounts you can use to save for retirement. The accounts you choose will depend on your specific situation. Regardless of the option that’s best for you, the goal is to invest 15% of your income into your respective account.
- Save for Home Down Payment
Buying a home will likely be the largest single purchase you will ever make, and for many, the process can be extremely daunting. The size of your down payment will affect your monthly mortgages and your initial home equity, and therefore will have a massive effect on your long-term income. Some integral steps to save for a down payment include opening a savings account, starting a budget and cutting costs, and checking your interest rates and your credit. If you plan on ever buying a home, getting started on saving for a down payment as early as possible is extremely important.
- Build Wealth and Give Back
Once you successfully conquer these steps, you will establish a sturdy financial backbone; now it is time to have some fun. Build your wealth, give to charities that have meaning to you, and build a solid inheritance to leave for your loved ones. At this point, you have worked hard for financial security, and the possibilities are now endless. Have fun and be generous!
By: M. Anderson & L. White