Step 1: Create a Budget
A budget is telling your money where to go instead of wondering where it went.” If you’re not budgeting, you’re not managing your money. You’re just sitting on the sidelines hoping there’s enough money left over at the end of the month.
Step 2: Get on a Money Management Plan
Take a couple of minutes to write down some of your financial goals. Maybe you want to pay off all your credit cards. But wait, you also need to set aside some money for emergencies. Oh, and we haven’t even talked about investing.
Step 3: Set a Firm Financial Foundation
You’ll notice that the first three Baby Steps are centered around two things: setting aside money for emergencies and getting debt out of your life for good.
Getting Out of Debt It’s time to kick debt out of your life once and for all, and the best way to do that is with the debt snowball method. The debt snowball method is simple: You pay off your debts from smallest to largest, regardless of the interest rate. Before you know it, you’re gaining momentum and knocking your debts out one by one until you reach that debt-free finish line!
How Does the Debt Snowball Method Work? The debt snowball method is a debt reduction strategy where you pay off the debt in order of smallest to largest, gaining momentum as you knock out each balance. When the smallest debt is paid in full, you roll the money you were paying on that debt into the next smallest balance.
Getting out and staying out of debt is key. debt is the biggest barrier, a parasite to wealth.
Step 4: Invest and Save for Your Future
This is where the fun really begins. It’s time to shift your focus to money management for the long term. Almost a third (29%) of older Americans have nothing saved for retirement individual retirement account (IRA). No pension. Nothing.
No matter how much or how little you have in your nest egg, the good news is you have tools available to start saving for your retirement right now. Whether you’re 25 or 55, it’s never too early or too late to start! Retirement is coming. You need to prepare for it.
