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How To Invest Part II: Plan For Your Future

How To Invest Part II: Plan For Your Future

| February 18, 2021

Clients ask me all the time, “what would you do if it was your own money?” Or, “what would you suggest for your own Mom and Dad?” Or, “what are you doing for your own kids?”

Those are interesting questions to answer, because every situation is unique. But over the next couple of weeks, I’ll show you exactly how I insure, save, spend, and invest within my own household. I’m not saying that it’s the “right” way, but it’s my way, and my wife and I have set it up to reflect our values, goals, and aspirations. And while every situation is unique, you and I may share many of the same values, goals, and aspirations, which could lead us to a similar strategy.

Part II: Plan For Your Future

Let me be clear: budgeting stinks! But managing your household's cash flow is critically important to your financial success.

When my wife and I were dating, our church at the time in Midland was offering Dave Ramsey's Financial Peace University, which introduced us to his line of books, daily radio show, etc. My wife was early in her career, and I was in my last semester of graduate school at Northwood University. We both had student loan debt, I carried a very stupid credit card balance, and most months I couldn't find two nickels to rub together.

Fast-forward a few years, and we have no non-mortgage debt; a health emergency fund; save systematically for retirement, home projects, and vacations; and have college funds started for our children. Best of all, we spend less than an hour per week making it all happen! What used to take hours and cause endless stress and arguments has been reduced to a quick review, usually over a bottle of wine.

I'm not going to reinvent the budgeting wheel in this message, but as an existing client, I will happily meet (or Zoom) with you and help you create a plan. In fact, it's a service I now offer to attract new clients: Budgeting and Cash Flow

While Dave Ramsey paved the way for us, Ramit Sethi's blog, podcast appearances, and books brought on a modern twist, and kicked our plan into hyper-drive. 

One of the key take-aways from Ramit is to focus on the Big Wins. Cutting out a $3 latte here or there (which has somehow become a recurring theme in financial advice) is not likely to have a huge impact on your plan. But a big win - like paying off a credit card, refinancing a mortgage, or asking for a raise - may bring in hundreds per month. Ramit's encouragement is to "stop asking $3 questions and start asking $30,000 questions".

Regardless of your current financial status, it's never a bad idea to review your spending plan. While investing gets nearly all the attention in financial planning, managing cash flow is an under-appreciated area that makes everything else possible.

Here are some free resources from Dave Ramsey to get you started:
1) Debt Snowball method
2) Budgeting Forms
3) Recommended Budget Percentages

As always, write or call with questions. More to follow in a couple of weeks with Part III: Pursue Your Best Life.