1. I will continually keep 6 to 12 months in a liquid emergency fund. Yes, I said 6 to 12 months. In today’s economy how long would it take YOU to find another job making what you’re making now? I’d rather err on the side of caution.
2. I will stay on budget and not allow myself to get crazy with the excess cash I’ll soon have left over every paycheck. This is where I failed last time.
3. I will divide my savings as follows:
Savings for college (I have three kids).
Savings for weddings (I have two girls).
Savings for a replacement vehicle. I have a company car and my wife has a minivan. It will probably last at least another 5+ years. It’s a Honda.
Savings for retirement. Currently my company makes a contribution to an ESOP plan for my retirement. It’s been 15% of gross salary on my W2 but the last two years has been 25%. The year before that it was 20%. This is a hard deal to beat. I contribute nothing (not allowed to by law) and the company puts money into my retirement account which has historically grown at a rate greater than the S&P 500. I plan to save an additional 15% to 25% over and above what’s in my ESOP.
Savings for other major purchases. If I need a new [ fill in the blank ] I will have the money to pay cash and will only pay cash.
4. I will employ all the lessons of frugality I possibly can…within reason. I don’t plan on going hunting for my food (yet), I don’t plan on getting a milk cow or some chickens, nor do I plan on spinning my own yarn. Gardening, sure, but I’ll leave the homemade laundry detergent to some others!
5. I will learn to negotiate a better deal on everything. Negotiation is an art form that anyone can learn. Employing a little bit of haggling can put a little more money in my pocket!
6. I will learn some good old fashioned self control. How’s that for a revolutionary tip? Control your desires and how you act on them and you can control your own destiny. Self control is the key to making it. Master yourself and you can then master anything.
7. The most important tip is to…drum roll please…PLAN. We are too “seat of the pants” in this country. We plan for the next week, maybe the next quarter, but rarely do we REALLY plan further out than that. We “want to keep our options open” and we fear being tied down to some strict budget. But planning and budgeting is more about controlling your money than about restricting your fun. Planning lets you enjoy the fun of dressing up in shabby clothes, popping in the Billy-Bob teeth, and buying a car with all cash from a surprised salesperson. Wouldn’t that be fun? How about telling the furniture salesperson that you don’t need financing and that you’d like a 25% discount…heck, make it 35% since you’re paying cash. Or maybe just that deep secure feeling that you don’t owe anyone anything? That’s what I’m talking ’bout.
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