Financial Success in 2021 and Beyond

Budgeting is not the sexiest word to think about, but it’s a word we all need to be familiar with at any age and income level. Many people make decent money and still have no idea where their money is going and still live paycheck to paycheck. I used to be one of these people so I can attest to that mindset. Life shouldn’t be like this; you work too hard and make good money for you to live like this. 

We use a map to get to point A to point B, we have diet plans to get us to our goals, why don’t we have a financial plan to get us to our financial goals?! You need a financial roadmap and I am here to help you.

In the current landscape, we have budgeting apps at our ease, and some of them will connect to your bank account. I recommend, the “Every Dollar” app. It has a free version and premium version. I have the free version and it works just fine. The premium will connect to your bank account, but I am old school and like to reconcile my own accounts still.

If you have a spouse that is not on board with budgeting or has a money problem, you have some options on how to counteract this. Always bring up the “why?” Just think to yourself, why are you budgeting? Wedding coming up, house down payment, European vacation? Or my favorite, to invest more! You need to have an end goal to tell the other spouse on why you are gung-ho on budgeting. 

Determine you and your partners monthly take-home pay and look at your monthly bills. Do a gut check and see which is necessary. You will be surprised when you see a reoccurring monthly fee you didn’t know you had. This will determine your monthly necessary expenses. We will talk about this more below.

If you are not familiar with Dave Ramsey and his 7 Baby Step Program, I will lay it out for you. It’s the best financial roadmap out there, I can back this up on my own because it helped me get through some tough times. He also lays it out in his book, “The Total Money Makeover” which I highly recommend. 

Let’s walk through them, its pertinent to do these in order, keep in mind this is your roadmap to success:

  1. Save 1,000 in your starter emergency fund. 

Do not invest these funds, keep them liquid in a savings account for you to have easy access to it in case of an emergency. Car issues, AC broken etc. Life happens and if it does, you must pay cash! This is your personal credit line, so you don’t have to go into debt.

  • Pay off all Debt!

If you have credit card debt, student loan debt, car loan or any loan except for the house its time to pay it off! Free up your life. Cut up the cards except your debit card, you don’t need a credit card. 

  • Save 3-6 Months of expenses in a fully funded emergency account

Look at your budget and see what your monthly necessary expenses are and have a 3-6 emergency fund. Life does happen, job loss, medical emergency, house emergency maintenance. Be prepared for the unexpected and have these funds in a liquid account as well. These funds are not your investments, it is insurance and your personal credit line to avoid you going back into baby step 2!

b. House Down payment 

If you don’t have a mortgage, this is the step to save up for your down payment. Only do this IF you have your emergency account fully funded.

  • Invest 15-20% of your gross household income for retirement

Here’s where the fun begins so you can start accumulating wealth. Contribute your 401K to the employer match, fund your HSA to the max and fund an outside Roth IRA to get your 15-20% total investing threshold. 

  • Save for your children’s college fund

Set up a 529 plan or custodial account and start saving for college. Please do this after you are currently investing for yourself. The old airplane emergency analogy works for this, help yourself before you can assist others. 

  • Pay off your house!

Once you get to this step, any extra cash you have throw it at the principal! Get that house paid off. Can you imagine investing your mortgage every month? Get ready to pay yourself even more.

  • Build Wealth and give!

This is the best part, once you paid off the house, max out everything. Max out your 401K, IRA, HSA to the yearly max contribution and start a bridge account. Bridge account means if you want to retire earlier you can start to build another investment account you can use before you can tap into your retirement funds at 59 ½. Save up for a rental property and give! Have a charity in mind? Its time to give back, giving is so much fun.

More importantly for financial success, you need a dream team around you. Financial and tax planning is truly a huge burden and not to mention very overwhelming. If you do not know what to do, Dave Ramsey has a vetting service for financial, tax professionals, insurance and even real estate professionals that he recommends called, “Endorsed local providers.” I consider myself knowledgeable in the financial realm, but I even have a financial advisor. I don’t look at investments and mutual funds all day long, but he does, that’s his craft. Dave’s service is heavily vetted and trust the advisors he recommends have the heart of a teacher. Go to the website, insert your zip code for the advisors in your area. You will get a list by email; I recommend visiting and interviewing all of them. Please take your spouse as well, they will be dealing with them in the event you pass. See which one you like and get on the right track to success. 

Smart Vestor Pro : https://www.daveramsey.com/smartvestor

Tax Endorsed local provider: https://www.daveramsey.com/elp/tax-services

  • Please note, I am not compensated by Dave Ramsey or his services, I only recommend him due to having used his methods from my personal success.

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