7 Baby Steps to Financial Success
Talking about money makes a lot of people uncomfortable. They are either unaware of where they stand or where they want to reach. People measure financial success by House they live, Car they have or vacations they can afford. For me, I would measure financial success on how one plan for the worst. I mean, How long a person can continue with the same lifestyle without a paycheck.
I love reading books about personal finance. For starters, Rich dad poor dad is a good start. Even though it gives a good start to teach yourself about assets and liabilities, It doesn’t give you practical steps to take in you. For that, I recommend “The Total Money Makeover” by Dave Ramsay.
He lists the following 7 steps to achieve financial success. This is slightly modified to fit Canada.
- Save $1,000 for Emergency.
- Pay off all Non-Mortgage debt Credit cards, Line of credit, Overdrafts
- Build an Emergency fund that’s enough to take care of 3 months of monthly expenses.
- Put 15% of pre-tax annual household income for retirement into your TFSA/RRSP account.
- Contribute to RESP to get maximum Canada Education Savings Grant.
- Make pre-payment to your mortgage to the maximum allowed by your lender.
- Start giving back to Community.
If you don’t have mortgage and planning to buy a house, You can skip RRSP/TFSA contributions and save for down payment.
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