Baby Step 4: Invest 15% of household income into Roth IRAs and pre-tax retirement

If you’ve reached this step, you have no payments (but the house) and have saved 3 to 6 months of your living expenses.

It’s finally time to get serious about building wealth.

I don’t suggest investing more than 15% because the extra money will help you complete the next two steps – college savings and paying off your home early.

Well, why not less than 15%? Some people want to invest less or none so they can get a child through school or pay off the home super-fast. I hate to tell you, but the kids’ degrees won’t feed you at retirement, and if you throw all your money into your house, you’ll end up having to sell it to eat and buy the book 72 Ways to Prepare Alpo and Love It. Bad plan.

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