You probably realize that you should be taking some steps with your money, but you’re not sure where to start. It’s not as if there is a step-by-step guide on prioritizing your money and your goals…at least not in way you can understand (yet). We’ve developed a system of 10 steps that each and every one of us should take, in a specific order. This will help you in prioritizing your money AND your goals. I will summarize these steps for you here.
If you’d like to download our guide now, click here.
The 10 steps can be summarized in three phases.
1. Discuss Your Goals and Expenses
Now, I realize this might not seem like an obvious first step. But, I’ll tell you, every financial plan starts with one specific question…”What are your goals”.
Making smart money decisions on a daily basis is incredibly difficult. It takes enormous amounts of discipline and self control. By starting here, you’re motivation goes beyond the typical money fears and stresses. Positive reinforcement is much more powerful and will fuel your motivation far beyond your fears.
There are goals and expenses. Take the time to contemplate your own, but also to discuss them with your spouse or partner. It’s vital that you both respect each other’s goals, but that you also have joint goals.
To keep you BOTH on course, it needs to be a joint effort.
2. Build a Secure Foundation
Before you can build a home, you need the foundation. The foundation is the source of strength and comfort for you and your family. Taking the steps to strengthen your finances is non-negotiable when it comes to prioritizing your money and your goals. Without these, you’re putting EVERYTHING at risk.
Get Your Budget In Order
First, you need to know where and how you’re spending your money. Go back 6 months and categorize each and every expense.
Then, you can use this information to build your ideal budget. There are a number of “budgeting templates” that attempt to tell you how much to spend on things like food and your home. This is a waste of your time. You need to spend your money on what is important to you. There is a way to back into your budget.
Join our 7-day Boost Your Savings Challenge to find YOUR ideal budget.
Transfer Your Risk
This is vital to strengthening your foundation because it places a net under your family. Each one of these will put a floor in how much you pay in an emergency.
Build Your Reserves
I know you’ve probably heard of an emergency fund. You may not know what it means or how much you should have. For a young family, you’ll want to have 6 months of your bare-bones expenses saved. This is how you absorb those risks you couldn’t eliminate or transfer.
This will cover a broken air conditioner, loss of income for a period of time or a large deductible for a hospital stay. It’s there for your emergency expenses that are unavoidable and necessary.
Manage Your Debt
I said manage, not eliminate. I’m not telling you that you need to eliminate ALL debt before you can move forward.
I’m telling you that having credit card debt and too much debt is toxic to your well being and will keep you from hitting any of those goals.
Start with the debt that has the highest interest rate and pay it down as aggressively as you can.
3. Save for Your Goals and Expenses
Your foundation is built and you know what you goals are. Now, it’s time to start saving…for the big stuff.
Get Your Retirement In Order
The biggest goal we all have is our retirement fund. Tim Ferriss, author of The 4-Hour Work Week, basically says that our retirement fund is an emergency fund for when we can no longer work. For this reason, it’s hugging the border between a goal and part of your strong foundation.
To start, save 10-15% of your gross income into an account earmarked for retirement. If you can, take advantage of a Roth IRA or Roth 401(k).
Crush Your Goals
Last, but certainly not least, are your goals. These are those big goals that are meant to enhance your life and bring passion and meaning to your life. It’s where you and your family develop your best memories and how you provide those experiences for your kids that money can’t buy.
Of course, you’ll want to set up some automatic transfers to start funding.
There are some fun ways to boost your savings your should explore. Always be on the lookout for shortcuts and deals to cut the corner to your goal.
No one every taught me (until I started my career) what steps to take and in what order. At best, it was more of a shot gun approach giving you scattered tips and “smart choices”. You never know what applies to you and what doesn’t. If you try to DIY it, you’ll be flooded with factoids that will just ultimately confuse you.
That is why we built this framework to help you in prioritizing your money and your goals.
If you’d like to see all of these steps, in order, click here to download our guide.
Sports Fan, Movie Buff, and Anything Outdoors sums it up. Brad loves spending time with his wife, Ashley, and their two boys. He helps empower people to take control of their money, bringing them the confidence to build the life of their dreams.
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About Matt & Brad
They are identical twins and money experts. Matt and Brad Ruttenberg have, combined, over 2 decades of experience as financial planners. They are known for simplifying money and helping others go from living paycheck to paycheck to thriving financially.
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