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Eliminate Financial Stress,
Get Ahead Financially,
Become Wealthy
To-Do List

If you want to eliminate financial stress from your life and start working on becoming wealthy, this list tells you what steps to take and in what order.  It does not, however, tell you how to do each step.  For that, you have to read all of the numbered articles.  Think of this as more of a checklist of the things you should already know from reading the articles here on the Eclectic Site Financial Page.  These steps are an adaptation of those taught by Dave Ramsey.

Step One:  Create a budget to serve as a plan for getting control of your money.

In order to get on the path to eliminating financial stress and becoming wealthy, you have to have at least a little bit of money left over at the end of each month.  A budget serves as a plan to help you figure out where your money has been going, and to decide where it is going from now on.  Do not skip this step.  A budget can be time-consuming and a bit frustrating at times, but there is no way you can get control of your finances if you don't have a budget.  You have to trust me when I say that having a budget is absolutely a necessary step to becoming wealthy.  If you try to do it without a budget, you will most likely fail.  Do step one before doing anything else.

Step Two:  Build up emergency savings of $1,000

You've got to have at least $1,000 in emergency savings.  If you already have $1,000 set aside for emergencies, you can skip this step and go on to step three.  Just make sure that if you say you already have $1,000 saved up for emergencies, that $1,000 is only for emergencies and is not just money being saved up for something else.  In other words, if you already know what this money is going to be spent on, then it is not emergency money.  An emergency, by definition, is something you aren't expecting.

If you don't have $1,000 for emergencies, then this step becomes your temporary life's goal.  You need to concentrate hard on saving up $1,000 for emergencies and doing it as quickly as you possibly can.  The sooner you do it, the sooner you can go on to the remaining steps and the sooner you will be able to eliminate financial stress from your life.  Do not go on to step three until you have $1,000 set aside for emergencies.

Step Three:  Become completely debt free except for your mortgage if you have one.

Apply the techniques taught in Eliminating Debt Completely and begin paying off the debt you currently have.  While you're doing that, make sure you aren't still borrowing money and thus creating new debt.  This includes charging anything to credit cards.  You need to completely stop the use of credit cards while you are doing step three.  For most people, this step does not go quickly.  The average time to become completely debt free except for the mortgage is two to four years...yes, I said years.  If you are looking for a quick, easy answer, then what you learn here on the Financial Page is not for you.  However, if you want something that works every single time, then what you learn here on the Financial Page will work, but can take quite a bit of time.  Think about it this way, it most likely took you years to get deeply into debt, so it is okay to expect it to take years to get out.  Besides, if you don't do it, then two to four years from now, you will still be deeply in debt and financially stressed.

Step Four:  Build up your emergency savings to at least three month's worth of income.

It is recommended that you eventually have six months worth of income saved up.  That level of savings will prepare you for nearly all of life's somewhat larger financial emergencies.  But for now, make sure you always have at least three months worth of income saved.

Step Five:  Now that you are out of debt and have your emergency savings built up adequately,
start putting 15% of your take-home pay into some sort of retirement account such as an IRA, Roth, 401k, 403b, etc.

The average income in the United States today is around $48,000 per year.  15% of take-home pay would be about $450 per month.  If that were saved in a good Growth Stock Mutual Fund for 25 years, it would grow to over $700,000.  Whatever your income and whatever amount of time you have until retirement, you need to be saving toward retirement.  It sneaks up on you faster than you think and you don't want to wait until it is too late.  The longer you save, the more money you'll have.

Step Six:  If you have upcoming college education expenses for your children, try to save another 15% of your take-home pay for college.

Even if this won't add up to enough to completely pay for college by the time it is needed, it will certainly help to offset the ever-increasing cost of a college education.  For more ideas on where to get money for college, be sure to read Where To Get Money For College.

Step Seven:  If there is any money available after following all of the steps up to this point, start working on paying off the mortgage if you have one.

Also, if you no longer need to save money for college, put that money toward paying off your mortgage.  If you have no mortgage, then go on to step eight.

Step Eight:  Save like crazy, invest, help others and become wealthy!

By the time you have gotten to this step, you are following a budget, you are out of debt, you have three to six month of emergency savings, you are saving for retirement, you are saving toward college expenses, and you have paid off the mortgage.  Now, there is nothing more to do but to save, invest, help others and grow wealthy.  You also now have plenty of money available for fun, travel, cars, consumer electronics, etc.  You have done things that other people won't, so now you get to live like other people can't!

"The journey of a thousand miles begins with just a single step"  
Ancient Chinese Proverb

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This article copyright 2007 by Keith C. Rawlinson (Eclecticsite.com).  All rights reserved.
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Please know that all of the thoughts, information, suggestions and techniques given on this site are nothing more than the author's opinion on the matter being addressed.  Do further research before making any decisions.

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