1) First things First

To begin to transform your financial life, you first have to back away from the edge. cliff Most American families are just one paycheck away from a real disaster. This is too close to the edge. Give yourself some room.

The FIRST thing you must do is begin an emergency fund. Pay yourself first!

Most people today only save about 4 percent of their income. That means they are only working 22 minutes a day for themselves. By making small, incremental improvements to your savings, you can give yourself a cushion. This small start will only be the beginning. Eventually this will grow to fund your retirement (more on that later).

Always Pay Yourself First.  Ideally, at least one hour’s worth of income every day. Another way to put this is to say that you should Pay Yourself the First 12.5 percent of your gross income, but an hour a day is easier to remember.

The key is making your saving automatic by “paying yourself first.” In other words, pay yourself before you pay the mortgage, the credit card company or even your taxes. And make sure it happens automatically each month so you don’t have a chance to spend that money.

The government pays itself automatically each time you get paid. Taxes are taken out of your salary before you even get your check. Arrange for money to be taken from your salary and put into a savings account. Work on getting your emergency savings account to have at least 3 months of income set aside.

Next, you and your spouse MUST agree on what is an emergency. This can be more difficult than you think. But the rules of engagement are that this account must always have 3 months reserves in it. No exceptions. And taking money out must be serious business.


Very simply, however you receive your income, take 10% off the top and put it away in a savings account. Don’t touch it. When you get your check, either do it yourself right there at the bank, or have it done automatically by whoever is doing your direct deposit, set up a saving account to have 10% automatically direct deposited there.
You must be paid first, and every single time you get paid.

For some, starting to pay yourself before you have paid off your debt may seem counter-intuitive. Why save before paying off debt? Because if you don’t save first, you’re not going to be able to cope with unexpected expenses. Do not tell yourself that you can keep a credit card for emergencies. Hide your credit cards; USE CASH for emergencies.

How much should you save? Ideally, you’d save $1,000 to start. This money is for emergencies only. It is not for entertainment or purchases. It is to be used when your car dies, or when you break your arm in a touch football game.

Keep this money liquid, but not immediately accessible. Don’t tie your emergency fund to a debit card. Don’t sabotage your efforts by making it easy to spend the money on non-essentials. Consider opening an online savings account. When an emergency arises, you can easily transfer the money to your regular checking account. It’ll be there when you need it, but you won’t be able to spend it spontaneously.

We are taught this principle by God himself, don’t forget to give 10%, this idea frees us from gripping tightly to our money. It reminds us from where all things come and we are only borrowing them for awhile.

After your emergency account is fully funded, arrange for money to be re-directed and  put into a retirement account mutual fund before you ever get to see it. Most employers make this easy through a 401(k) plan. Sign up and you’re well on your way to retirement.

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