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The Ten Year Savings Plan (216)

The Ten Year Savings Plan (216)

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Published by ramitsethi
From iwillteachyoutoberich.com
From iwillteachyoutoberich.com

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Categories:Business/Law, Finance
Published by: ramitsethi on Jul 01, 2009
Copyright:Attribution Non-commercial

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07/10/2013

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I WIllTEAchYouTo BE
by
RAmIT SEThI
 founder and writer of 
iwillteachyoutoberich.com
“A unique voice on money,
one singularly attuned to…his generation.”
 
—San FranciSco chronicle
 
V    i    s   i    t    i    w   i    l    l    t   e  a   c  h    y   o  u   t   o  b   e  r   i    c  h   c  o  m    f    o  r    d    a   i    l     y    t   a   c  t   i    c  a   l     t   i     p   s    ,  b   o  n   u   s    d    o  w   n   l    o  a   d    s    ,  a   n   d     i    n   t   e  r   a   c  t   i    v   e   s    p   r   e  a   d    s   h   e  e  t   s   
No Guilt.No Excuses.No B.S. Just a6-WeekProgram That Works
 
216
I Will Teach You to Be Rich
I
’m always surprised by the e-mails I get rom people who haveoptimized every part o their investing strategy and are nonetheless
 still 
looking or more ways they can optimize their nances. It’s easy: Just ask people ve to ten years older than you what they
wish
they hadstarted earlier, then do that. You’ll get three answers right o the bat:
1.
 
CReate an eMeRgenCy fund.
An emergency und is simplyanother savings goal that is a way to protect against job loss, dis-ability, or simple bad luck. Most people in their twenties don’t needemergency unds because we can just borrow money rom our othersavings goals or, worst case, go home to Mom and Dad. But i youhave a mortgage or you need to provide or your amily, an emer-gency und is a critical piece o being nancially secure. To createone, just set up an extra savings goal and then unnel money to itin the same way you would your other goals. Eventually, your emer-gency und should contain six months o spending money (whichincludes
everything:
your mortgage, other loans, ood, transportation,taxes, gits, and anything else you would conceivably spend on).
2.
 
InsuRanCe.
As you get older and more crotchety, you’ll wantmore and more types o insurance to protect yoursel rom loss. Thisincludes home-owner insurance (re, food, and earthquake) and lieinsurance. I you own a home, you need insurance, but young, singlepeople don’t need lie insurance. First o all, statistically, we hardlyever die, and the insurance payout is useul only or people whodepend on your livelihood, like your spouse and kids. Beyond that,insurance is really out o the scope o this book, but i you’re trulyinterested, I encourage you talk to your parents and their riends,and search or “lie insurance” online to research the various options. You probably don’t need to buy a bunch o insurance options rightnow, but you can certainly set up a savings goal so when you
do
needthem, you’ll have money to use. One last thing: Insurance is almost
financial otins rSuer-Achievers: Make theTen-Year plan That few others d
 
 
217
EASY MAINTENANCE
never a good investment, despite what financial salespeople (orclueless parents) will tell you. So use it as protection from downsiderisk—like for fires or accidental death when you have a family—butdon’t think of it as a growth investment.
3.
CHILDREN’S EDUCATION.
Whether or not you have children yet,your first goal should be to excel financially for yourself. I alwaysget confused when I see people on TV who are in debt yet want tosave for their children’s education. What the hell? Listen up, Momma:First, get out of debt and save for your own retirement.
Then
you canworry about your kids. That said, just as Roth IRAs are great retirementaccounts, 529s—educational savings plans with significant taxadvantages—are great for children’s education. If you’ve got kids (orknow that one day you will) and some spare cash, pour it into a 529.These are just a few of the things you’ll be forced to think aboutin the next ten years. The best way to prepare yourself is to talk tosuccessful people who are somewhat older than you and have their acttogether. Their advice can be invaluable—and can give you an edgeon planning for the next decade.

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