Savings! [Guest blogger: LW]

Student submission from our Personal Finance class:  334

So far we have learned a lot about savings and some easy tips to always keep in mind.  Here is a run down;

  • Dave Ramsey shared with us the baby steps to financial wealth.
    • The first step was to have a savings plan and to try and put aside $1000 for Emergency Funds.
    • Next is to get out of debt! You can’t build wealth if you are constantly in debt.
    • It is also important to have a fully funded emergency fund from 3-6 months
    • Next, start a long term investing which includes 15% for retirement. Although that seems like a long way away, it is very important to start saving and budgeting early.
    • He went on to suggest that we start planning to save for our children’s future (if you plan on having any) which  includes colleges and weddings.
    • Another major step is to pay off your house!
    • Lastly, you should build a ton of wealth and give a lot of it away like to charities!
  • The top three things to save for includes, emergencies, future purchases, and wealth building.
  • After reading The Automatic Millionaire, I learned that how much you earn has almost no bearing on whether or not you can and will build wealth.
  • One last important fact I learned about was the pay yourself first formula.
    • The first group are those who are broke; they don’t pay themselves and they spend more than they earn.
    • Next are those who are poor; They spend everything they make and save nothing.
    • The next group is the middle class; They pay themselves first 5-10% of income.
    • The upper Class/Wealthy pay themselves first 10-20% of income.
    • Lastly, the ones who are wealthy enough to retire early pay themselves first 20% or more of income.

Although it may seem impossible at times, with the right steps and financial planning, anyone can become a millionaire!

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