This week, March 4-8th, I am participating in the second annual Women’s Money Week. Check out the WMW site to hear from other bloggers on each daily topic and be empowered to better control your finances!
“Everyone has a plan – until they get punched in the face.” –Mike Tyson, boxer.
I thought this quote was fitting for today’s topic, Future Planning & Financial Planning. I thought I’d use a photo from the movie Warrior because it’s about boxing (MMA fighting, Dave just corrected me. Whatever.) and, frankly, Dave has a man crush on Tom Hardy.
How much planning do you do for your future? Do you have an emergency fund set up? A 401k? A Roth or Traditional IRA? Other investments? Savings for a down payment on a home? A 529 plan to fund your kids’ tuition? All of these routes we funnel our money to are not for the present. They’re for what’s to come. If you want to save 20% for a down payment on a home you’ve got to hit that 1% first.
Very often I’m reminded of how blessed I am to be married to a man who desires to stay out of debt and be a good steward with what we have. If you’ve followed Budget for Health for any amount of time, you know I drop the name Dave Ramsey a lot. The seven baby steps were laid out so practically in his book Total Money Makeover that when we took the first step it wasn’t even one year later that we found ourselves 100% debt free (after starting with $30k of student loans!). His baby steps are the following:
- $1,000 to start an Emergency Fund
- Pay off all debt
- 3 to 6 months of expenses in savings
- Invest 15% of household income into Roth IRAs and pre-tax retirement
- College funding for children
- Pay off home early
- Build wealth and give; Invest in mutual funds and real estate.
Tyson’s got nothin on us
Having that 6-month emergency fund sure helps us pursue our other financial goals without worrying. That way if we do get punched in the face, it won’t be a one-punch knock out. If I get punched, I’ll be all like, “That’s okay, I’ve got 6 months of backup. Bring it.” The same goes with investing. We’re only 24/25 years old now but when we are aged to ripeness and decide to do something else with our old selves, we’ll be able to do so and won’t need to pick up a job as a Walmart greeter to make ends meet.
New battery, new car starter, new tires…
Thankfully we’ve only had wimpy punches come our way over the past few years of marriage. Replacing our tires was our most expensive purchase but we didn’t even feel the punch because we had set aside a little each month toward car repairs so when the time came and things did start falling apart we already had what we needed to cover it.
What small steps can you take to ensure you are securing the future of your family? You could start with opening a savings account and setting aside a percentage of each check before you blow it on something you don’t really need. You could figure out what percentage your employer will match for your 401k contributions and get that free money. Meet with a financial adviser and set up a Roth IRA. It takes a little effort to get rolling, but you’ll pick up momentum and be ready for any punches life dishes out!
What steps are you taking to plan for your future?