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Max is on Baby Step 4. He's renting because he's active duty military, unmarried, and has no children. He isn't sure how to think of the later Baby Steps because of his situation.

QUESTION: Max in Fresno is 35 and on Baby Step 4. He’s renting because he’s active duty military, unmarried, and has no children. He isn’t sure how to think of the later Baby Steps because of his situation. Dave says the only one he needs to worry about is Baby Step 4 and 7.

ANSWER: You’re not dealing with Baby Step 5 or Baby Step 6 because you don’t have kids to save for college, and you’re not paying off a house because you don’t have one, which leaves you with really Baby Step 4—that’s investing for retirement—and Baby Step 7 are somewhat combined, in that Baby Step 7 is just build wealth and give a bunch of it away.

If I’m in your shoes, I’m going to have my lifestyle at a reasonable level and enjoy yourself—not spending it all but certainly be giving and be serious about your investing to build wealth. Some of that wealth does not need to be in a retirement plan so that someday, if you look down in a mutual fund that was not in a retirement plan and there was $300,000 in there and you got married, you could write a check and buy a house. You’d have a lot of different options then for that wealth.

The point of Baby Step 7 is that you’ve gotten all the basic financial planning things done. You’re debt-free, you have your emergency fund, you’re saving for retirement, now there’s really nothing left to do but build wealth and give. It is kind of vague, but in your case, that’s exactly what it is. It is what it should be. You’re right on track to do that.

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