Both plans provide great financial guidance.  I’ve been doing some thinking lately about highlighting the best of both (and some of my own ideas) and bringing them together in one list.   And this post will bring some of that thinking and brainstorming to a reality.

I wouldn’t say this changes course on what both Crown Financial Ministries and Dave Ramsey are saying with their plans, but I think it might allow one to consider additional steps or further options in working towards their objectives.

Money Map: things to do now

1. Create a personal financial statement (assets – liabilities = net worth) to get a clear picture of your net worth.
2. Create a spending plan or budget.
3. Track your spending against the plan on a daily basis for good personal cash flow management.
4. Execute a will.
5. Get an appropriate amount of life insurance.

The Best of the Money Map and Baby Steps

1. Save $1000 for emergencies.
2. Pay off all debt with the debt snowball paying smallest principle balances first.
3. Pay off a second mortgage if the balance is 50% or less of your yearly income (advice from Dave Ramsey I heard on his radio show).  Otherwise, second mortgages get paid off as you pay off your home.
4. Save up one month of emergency savings.
5. Take advantage of employer matching for your retirement plan as long as you can continue to make forward progress.   In other words, if your employer matches 50 cents on the dollar if you contribute 5% of gross income; go ahead and begin investing up to 5%.
6. Save up three to six months of living expenses for emergencies.
7. Begin savings for major purchases (home (20% down), auto, vacations, etc.)  Increase retirement contribution to 15% of income.  Begin savings for children’s education.  Emergency savings could also be built up to 6-9 months depending on your threshold for risk.  Obviously, there will be a lot of savings buckets created in this phase.
8. Buy affordable home if you do not already have one.
9. College savings funded.
10. Home paid off.
11. Retirement funded.  Continue to build wealth and give more, give more, give more!

I’m sure the above plan isn’t perfect,  As I mentioned, its not meant to be original, but I felt I needed to have a little more guidance around the savings area, in particular, that would define what we’re going to do with our money once emergency savings is funded.  Again, I tried to include what I liked about both the Baby Steps and Money Map in this post.

I think an interesting observation is that steps 1 – 7 could be done very early in life if you have the right motivation.  If  only I were in my twenties again!

What do you think about this plan?  Would you suggest any changes?

Many people dream of debt free day, or just think about having a balanced budget tomorrow.  Others have goals of paying for their children’s college education and some just want to help their children avoid the same mistakes they did.  

I often think about financial goals because knowing your goals and priorities is the foundation of every plan.  Think about it.  If you don’t have goals it’s difficult to determine spending decisions in your monthly budget.  Is your immediate goal to pay off debt or save for emergencies?  Without clearly establishing priorities you may not make the best spending decisions towards achieving your most important goals.  Therefore, everyone should know their financial goals and top priorities.

I sometimes visit CNN Money online and browse the content in their personal finance category.   I recently came across their Money 101 lessons and lesson 1 discusses setting financial priorities.  According to the article, there are 10 top things (summarized below) you should consider in setting your financial priorities. 

Top 10 things to know in setting financial priorities

Narrow your objectives

Decide on the goals that are most important to you and your family.

Focus first on the goals that matter

You can’t work on every goal at once.  Take the time to prioritize them and choose to work on the most important goals first.

Be prepared for conflicts

When goals conflict (you’re not sure which to tackle first), I personally recommend considering the priorities Dave Ramsey sets in his Baby Steps.

Put time on your side

If you’re consistent over time in your savings and investments they will grow.  The same could be said with following your plan to get out of debt.  The takeaway for me on this is to be patient.  Follow your plan and believe you will succeed.

Choose carefully

Choose the goals that matter the most to becoming a better steward of your money and building financial security for your family.

Include family members

Take the time to plan your goals with your spouse.  My wife and I try to sit down and review our goals once per year.

Start now

There is no better time than now to start managing your money wisely, setting goals and building plans to achieve them. 

Sweat the big stuff

Keep your goals in focus.  Consider other options, for example, if a large vacation may take you off track from paying off debt. Look for a less expensive way to relax.

Don’t sweat the small stuff

It’s okay to have some spending allocated for fun as long as you take your goals into consideration as you make spending decisions.

Be prepared for change

Goals may shift as stages in life change.  For example, we’ve learned there are plenty of expenses associated with having young children.  As the children grow older the types of expenses change.

Final thoughts

If you take away two things from this article, I would suggest setting the time to plan you goals with your spouse, if married, and start now.  Schedule time this week to list your goals on paper and priortize them!   

Can you think of other things to consider when creating your goals and setting your financial priorities?