The Nine Money Milestones... According to a Bank

I went to a free financial health checkup at my local credit union branch. I sat down with an advisor who didn’t take a look into any of my financials. They asked me a few questions. Made sure that I knew they gave out auto loans and home loans. Gave me a pamphlet, an umbrella and sent me on my way. The page they gave me was titled, “How Close are you to Financial Freedom?” On this page they gave me the nine money milestones to become financially free.

1. Save $1000 for an emergency

I suppose nine milestones had more of a ring to it than eight milestones because as you will see later the first milestone and fourth milestone are going hand in hand. That is until I read them in chronological order. At first, I thought this was nowhere close to being enough. $1000 doesn’t get you much nowadays but it could get four new tires if needed. It can cover some unplanned circumstances, but this number needs to be increased by a lot. More on this later.

2. Maximize your company’s 401(k) match

If you aren’t maximizing the match for your retirement, you are just throwing away free money. No stock in the world will ever double your money every time you invest in it. It is also pre-tax dollars so the 6% of your gross pay will be 12% of your gross pay every paycheck put into the stock market for your nest egg to grow. A 6% company match is great so just do whatever your match is. If it is 4% take advantage because $1000 gross pay weekly will turn into $80 in your retirement account each week. If you never increase payrate and never increase your contribution. 80$ a week over 36 years with an annual return of 8% will turn into a nest egg of just north of a million dollars. This money will be taxed by the government, but it is still a hefty sum from just forty dollars of your gross pay taken from you each week. You would have put $110,000 and your company would have put in $110,000. I like a million dollars but play around with the numbers to match your situation.

3. Pay off all debt, except your house

Debt will eat your paycheck alive. I listen to all sorts of financial podcasts and in my personal life I have seen people just be completely drowning in debt. During podcasts people would be in absurd car debt, credit card debt, school loans, and sometimes a mortgage. Even if they had a salary of six figures they would still be check to check. I love the Dave Ramsey snowball method where you make the minimum payments on all except the lowest one where you attack that one with all the savings you have made from sacrificing some of the spending lifestyle. No UberEATS, no Starbucks, and no fun. An extremely tough time to live through but coming out on the other side debt free feels so good. I had a friend who had minimum payments of 1500 dollars a month on all of her debt. She rented a house with her husband, and it tied them up financially. The interest charges alone were nearly a hundred dollars a month which is just absurd.

4. Save three to six months of expenses

This goes hand in hand with the lovely number one. It should just be combined with the 1000 dollars into an emergency fund. Having it extremely liquid is the most important thing here if some huge thing occurs and you have no job usually you can find a way to replace your income in six months. Then it’s catchup time where you have to build it back up. This is one of the most important steps in my opinion, life is really unpredictable, rather be safe than sorry.

5. Connect with an advisor

Bringing in an unbiased skilled professional is always a good thing. Finances are typically a very emotional thing to people, and they can look at their money in a very different lens. An unbiased educated opinion can do wonders for you to stop the bullshit excuses you handcuff your finances to. Starting to get put in the right direction for financial success is the best thing to do as soon as you can.

6. Set goals and save for them

Retirement at a proper age should always be a goal in the front of your mind. Make your retirement accounts investing automatic so you never miss out on potential growth. Saving for a house can be a huge goal for the future of your family. Becoming debt free of all bad debts is an incredible goal to shoot for. Also, vacations are a great goal to set to have some experiences in the short term. Cutting out that lunch out each week to put in a cruise fund over 40 weeks will turn into $600 ready to be spent. Saving up to go to college or take a class in a skilled trade is another great short-term goal to save up for. Whatever your flavor is, make a few sacrifices to be able to have an incredible experience. You can make automatic deposits, or you could do a way that gives you sweet dopamine each time it occurs. If you want to break a habit like an afternoon coffee on the drive home from work start to skip that habit and put the money saved into an account immediately after. The savings will grow, and you can put it into another great vacation if you want to. The growing will give you that immediate feedback that your brain needs to reenforce a habit.

7. Invest 15% of your income

This is a little lower than the usual 50/30/20 rule. 50% needs, 30% wants, 20% invest. If you are able to do more than 15%, great but some people aren’t in the position to do that. Putting 15-20 precent away for your future is a great way to still live happily now while also setting yourself up for a lovely retirement.

8. Pay off your home as quickly as possible

Wouldn’t it be incredible to live without a mortgage eating a big chunk of your income? Hopefully it is only 25% of take-home pay but sometimes it could be even more. Just imagine being able to use that income for other things. The average mortgage on an average home price in Florida is around $2000 a month with a 20% down payment. The numbers can fluctuate, Florida has just been growing significantly. That payment is with property taxes and homeowners’ insurance built in. That’s a pretty could chunk of change to be able to spend monthly. $24000 saved yearly. Just a thought to give, if you have the ability to pay off pay it off quick. Especially now with the awful interest rates of 7% on a 30-year mortgage.

9. Donate your time, talent and treasure

We were put on this Earth to help others out. Just like on a pre-flight safety spiel once the oxygen mask is secure on your face, you can begin to help others. Giving back is one of the greatest feelings in this life and I hope people can be safe in their finances to be able to participate in this. One grandpa of mine has passed away and took care of everything for my retired grandmother. She is comfortable to live the rest of her life. My other grandfather works on houses for real estate and has acquired several different rental properties that he has dispersed out between his family members. He has been able to keep his costs extremely low still being in the same house he built himself in the 70’s for $12000. He has also been able to provide housing for his brother that found himself homeless. Pay for his two kids to each have their 25-year wedding anniversary trip. Pay for his grandkids to have a nice down payment on a new car for graduating high school and gave them a hand me down truck. He has helped his people out tremendously and he was able to do this by keeping his costs down extremely low. Except his Lowe’s credit card, they take ALOT of money from him. I am nowhere near the position to help out financially. When I had more income, I was able to donate to K9ForWarriors. They are a foundation that saves dogs from kill shelters and trains them to be service dogs for veterans suffering from traumas. Great organization to donate to.

These nine steps were fun to look at during my financial audit this last week. These serve as a nice baseline for some financial education which this world desperately needs. I hope one day public schools will be able to make financial literacy as a core class.