You don’t want to waste your time on things that don’t work. No one does!
If you need a stain remover, you buy the brand that removes that mustard spot. And if you’re paying someone to do your taxes, you want a pro who’ll do it right the first time.
The same thing’s true with money. When you’re ready to take control, you want to make sure you’re doing it right. Here are seven proven methods—and insight from people who’ve used them—for doing just that.
1. Save $1,000 to start your emergency fund.
“I never knew whether I should save money or pay off debt. But putting $1,000 into a starter emergency fund first gave me the courage to pay off debt second, instead of always worrying about saving.” — Miriam
Socking away $1,000 into a starter emergency fund might seem pretty basic. But when it comes to your money, it’s so important to everything that comes after. People who try to save for emergencies and pay off debt at the same time often lose focus or motivation. Or a simple—but expensive—emergency derails their progress. Miriam kept her focus sharp and kept emergencies at bay by creating a starter emergency fund before she began tackling debt. Now that’s peace of mind.
2. Pay off all non-mortgage debt.
“My wife and I got gazelle intense and paid off more than $5,000 in debt. We now have no credit cards and are working on our last non-revolving credit, our student loans. I’ve already done all the calculations. We will be debt-free by age 23, mortgage free by 30, and millionaires by 48. We’ve already started planning a giving program for the local veterans and the widows in our area.” — Andy
For a lot of people, getting out of debt is the toughest challenge of all when it comes to money. But when it happens, it opens the door to dreaming. What could you do if you had no debt? For Andy and his wife, paying off their debt brought them one step closer to making their dreams reality.
3. Fully fund your emergency fund with 3–6 months of expenses.
“It took almost four years to build a fully funded emergency fund. Since it’s been in place, we’ve never had to use it. I'm not sure if we haven't really had emergencies or if we just found a way not to use it.” — Michael
A funny thing happens when you go through life without a nice, cushy emergency fund: Emergencies happen. Expensive ones. But when that emergency fund is in place? It works as emergency repellant. They just don’t seem to happen as much. And when they do occasionally pop up, they feel more like minor annoyances. As Michael learned, an emergency fund allows you to progress in your financial journey without worrying it could come to a halt at any time.
Related: A Quick Guide to Your Emergency Fund
4. Invest 15% of your household income into retirement.
“I invest 15% toward retirement and treat it as a monthly bill on auto draft when my paycheck hits my account. I would have never imagined I would be able to contribute that amount, let alone do it consistently. Life feels very peaceful.” — Rachel
Retirement can be easy to put on the backburner until it’s too late. It just seems so far away, and there are other things happening now that demand your time, attention and money. But unlike Rachel, you might be letting your retirement savings slip away every month because you’re not intentional about investing. Once you have an emergency fund in place, the greatest gift you can give your future self is socking away cash now so your money has time to grow.
5. Fund your kids’ college education.
“I am a mother of a 12-month-old. I had little to no savings. I had no idea where to start and how to get out of debt. Dave Ramsey not only helped me to get out of debt with the skills he taught me, but he helped me to start her college fund and my retirement fund!” — Nicole
After retirement investing is taken care of, it’s time to think about college for the kiddos. Even if that’s not for another 10 or 15 years, starting early is important, once you’re ready. In case you haven’t noticed, college is expensive! And how awesome would it be to give your kids the gift of starting out life without any student loans! Thanks to Nicole’s foresight, her baby will head off to college without having to borrow a dime.
6. Pay off your house.
“We just paid off our house! It took us five years. When my hubby got rear-ended and our car got totaled, we had the money to buy grandma’s car right away as our replacement. Yes, having a paid-for home has saved us numerous times on this journey.” — Shellie
Can you imagine owning your home outright? Shellie and her husband realized the power of all that extra income every month not going to pay the mortgage. You’re better prepared for emergencies and can make your money work for you in other ways. Best of all, it sets you up to coast right into a life of generosity.
7. Build wealth and give.
“We paid off our home in 2006 and are totally debt-free. The former house payment then went to paying the remainder of our son’s college tuition. He has no student loans. My wife and I went to Italy for two weeks for our 30th wedding anniversary. We’ve been able to put away more toward retirement. We’ve also been able to support an adoption ministry.” — Gregg
When you owe no one anything, that sets you up to grow your own wealth and give a lot of it away. Imagine being able to choose any ministry to give to! When you have no debts and your own family is taken care of, you’re creating a legacy for your family by being smart about saving, spending and giving.
Now that you’ve seen how other people have won with money, what are you waiting for? Get started on your own journey to financial peace. Find a Financial Peace University class in your town today!