All across the U.S., teachers, and kids are screaming SCHOOL’S OUT!!!! FREEDOM!!!
Of course, their parents have lost some of their freedom and are weeping a bit inside but will never let their kids know it. But with summer vacation comes summer vacations. I remember road trips with my family. We traveled to the Boston area one year to visit my aunt and uncle. That’s more than 9 hours of driving and doesn’t include potty or food breaks. Of course, back then, we hit rest stops and ate whatever my mom packed for the trip (or we went hungry, lol). My sister and I fought like cats and dogs, and while at my aunt’s house, I was grounded for bad behavior (I was a “challenging” kid). The point is, mom and dad had a plan. They planned when we would leave. They planned food for the trip. They knew when we would get there, how long we would stay, and what routes we would drive each way.
So too, with our finances. As discussed in the posts on budgeting, you need to have a plan. And part of that plan, like a vacation road trip, is the Roadmap to Financial Success.
The roadmap breaks the trip down into two parts. First are the three steps to financial security:
- First, set up a mini emergency fund. This fund covers small things like a new car alternator or fixing a broken furnace. Think $1,000
- Second, pay off ALL debt except any mortgage.
- Third, complete saving up for an emergency fund. Think of 3-6 months of expenses.
The second leg of the journey is the map to financial success:
- First, start putting 15% of your income into retirement investments.
- Second, set some money aside for your kid’s higher education.
- Third, pay off your house.
Once your complete these steps, you will have reached your destination; financial success!