Your 2015 Financial Road Map
The New Year has just started, and that’s the riskiest time of year as far as I am concerned. The next few weeks are when resolutions seem to fall apart and you give up before you’ve even really given your goals and yourself a good chance of success.
Not this year! Do you hear me? Good intentions aren’t good enough. This is the year you follow through. My three-step Financial Road Map will get you on the path to a more secure 2015, and beyond. Follow this Road Map in the order below:
Shift Your Retirement Saving Into High Gear. If you don’t make it a big priority to save for your retirement you are setting yourself up to drive off a cliff: what are you going to live on in retirement? Yes, Social Security is valuable, but you are delusional if you think it is all you need.
Pay yourself by contribution to your retirement account, before you pay any bills. Yes, you read that right. You must make saving for retirement a top priority. If you have a retirement savings plan at work and your employer offers a matching contribution, I want you to contribute enough to get the maximum match. If you don’t have a workplace plan-or there is no match-focus on funding a Roth IRA.
Map Out Your Bill-Paying Priorities. I know you’ve got a bunch of bills that are a constant stress as you try to juggle all the payments. Time to set your bill-paying priorities. Spoiler alert: Paying the minimum due on your credit cards is not at the top of my list. You are to focus first on my Must Pays:
Those are your “must pay” needs, that should always be at the front of your bill-paying priorities. Everything else, including the minimum payment on your credit card, comes after.
Drive To Emergency Fund Safety. Your retirement account is not an emergency fund. Your checking account you use to pay your bills is not an emergency fund. I want you to have a separate savings account that is for emergencies only.
Once you are on track with saving for retirement and prioritizing your bills, your next job is to build your emergency fund. You know full well I want you to ultimately have eight months of living expenses set aside in this account. Don’t worry, I am not asking that you make that happen pronto. I want you to think of this a road trip that you are about to start: Every week or month you set money aside gets you closer to your destination. It may take you a year, or two, or more. That’s okay, as long as you are always moving in the right direction.
My three-step Financial Road Map is designed to guide you to the intersection of Truth and Security.
Truth: If you find you don’t have enough money to do everything I say, it is time for a financial tune up. Trimming your spending or making more money are your two options. Idling where you are is not an option.
Security: Knowing you are building savings for retirement, that your essential needs are covered and that you have an emergency fund ready for life’s “what ifs” is my definition of lasting financial security. You deserve that smooth ride in 2015, and every year.