Beginning Financial Plan

I have no debt. I plan on never having debt. Debt is a silly thing to have, and I don’t want it. And yes, I have a solid plan that will allow me to avoid debt.

First, let me say that I was incredibly fortunate to have money-smart parents with good jobs. I was spoiled growing up, but not super spoiled. My parents taught me a lot about money and discipline and I didn’t get everything I wanted when I wanted it, which was so fantastic. No, I had a lot more than most kids my age in the small town in southern MS, but I could have been way more spoiled. If I wanted something, I had to wait til a holiday or buy it myself with allowance. I have never had a new car – always used. And I didn’t have to buy my first car (thank you, awesome parents). I did not get my own car at 16, but I did at 18 when I went off to college.

I’m going to focus on allowance for a minute because the way they did it was a great way to do it and I model my current budget after it. When my sister and I hit a certain age (I don’t recall that age, sorry), my parents started giving allowance, each week, equal to our age, provided we did our weekly chores. So, when I was 12, I got $12 a week. Now, I couldn’t do just anything I wanted with this allowance. They gave us 4 jars to split up the money and told us how. I don’t remember the exact percentages, but I think these are close. I’ll see about asking if they remember. Donation money was 10% and we got to choose how we gave it away – either at church or do a charity we cared about. Free Spending was 25% and we got to spend that however we wanted. Short term savings was 40% and that was for birthday and Christmas presents. Long term savings was 25% and that wasn’t to be touched until we were grown. They told us it was to help pay for a car or a house one day, and it’s currently still sitting in my savings account in my bank.

Thanks to my parents teaching me about money, I was smart with it from the beginning. I never touched long term savings allowance. When I was in high school and got summer jobs, I saved almost all of it. Every now and then I’d take some and spend it on me, but mostly not because I was still getting free spending allowance. So, with no expenses, I saved. Between saving all my job money and saving my long term savings money, I have just over $5000 in a savings account when I went to college. More summer jobs in college, one the same that I had in high school and one an internship as an engineer, I had $7000 in savings by the end of college. Add $15000 from my grandparents dying on my mom’s and dad’s side (sad), and I was pretty set.

I cannot express how fortunate I was to have such money-smart parents. When I was born, and again when my sister was born, my parents opened up a mutual fund and started putting money in it every month. That was my college fund. So, graduated from college, I had no students loans, I had a good savings account, I had a car that was paid for, and I had a job. Great, great start in life. How do I keep ahead?

Just as I was wondering about money and budgeting and stuff (things I felt I had a good idea on, but wanted to know more about), my cousins gave me a book called “The Total Money Makeover” by Dave Ramsey. Great! So I read it. I now have a solid budget (that I stick to), I have an idea of what I’m going to invest where (working on implementing it), and I have a plan for where every penny of my money goes each month. I don’t use a credit card (I do have a good credit score, thanks to my dad), and I pay for everything either with cash, check, or debit card – in that preferred order.

I have my plan on Excel, so it can easily be modified, and certain budget items are in cash in envelopes with labels. I feel like I’m on a good track to stay debt free, buy a house one day, and retire happily. Once I finish tweaking my budget, I will share.

Please feel free to share thoughts, observations, ideas, personal stories, etc. I’d love to hear them 🙂

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