Today, we’re looking at the real reason why you need to build a solid plan so you can build wealth.
Right now, we’re in the second section of Page 20, under the title ‘You Need A Plan’, in Chapter 1 of Dave Ramsey’s Complete Guide to Money.
And here’s my lesson for the day:
Make a plan for your money, otherwise someone else will.
Yes, that’s right.
If you’ve built up your beginner emergency fund, but you don’t have a plan on what makes an “emergency” for you, then don’t be surprised when that fund goes to zero or even worse turn to debts for you.
It’s so great and excellent to follow each Baby Step…
… but you’ll also need to sit down, develop a plan, and continue to exercise the discipline that will carry you through your daily financial decisions.
That way, you can follow each Baby Step, and make steady and significant progress, without moving one step forward, and eight steps backward.
According to Dave, building wealth is easy to understand, but definitely hard to do.
Which explains the reason why people who just coast through life, and never have a solid financial plan, or the discipline to follow through with that plan…
… end up in a worse and painful financial state that they never saw coming.
When you use your emergency fund to open a new bank account, but you decide not to plan on how to spend that emergency fund…
… when you don’t clearly define what exactly you would spend that money on…
… then it becomes easy for any expense at all to look like an emergency to you.
- Changing your wardrobe might sound like an emergency, but really, is it?
- Getting a new set of sneakers might hit you like an emergency, but really, is it?
- Going on a vacation might sound like an emergency, but really, is it?
- Getting a new set of school bags for your cousin might hit you like an emergency, but really, is it?
- Buying your kid a new set of toys for his birthday might sound like an emergency, but really, is it?
You’ll need to constantly ask yourself these questions. And decide the expenses that can wait or that you’ll need to separately save up for, and the expenses that are truly emergencies.
Of course, you might need to splurge and save money for the things want.
But that’s exactly what you need to do – save money…
… And not spend your emergency fund on things that are not emergency or unexpected.
Dave, on Pages 20-21, describes how banks have gotten really good at selling you things you don’t need. Because they had a plan… and you didn’t.
You can read the story, on pages 20 & 21 in the book, of how you can unknowingly let the banks put you in a tough financial spot.
But please know: the banks will only make you lose your shirt, if you let them.
And the only way to not let them… is for you to actively take charge of your financial life, build a solid financial plan, and continue to muster the discipline to do the things that will help you achieve your financial plan.
Because here’s the deal: the banks can develop their marketing and selling process to suck people in to their well-oiled money-making machine…
… but it’s up to you to decide if you want to be sucked in or not, based on your financial actions.
Just know: whatever you decide to do, you’re always choosing a path to follow.
If you decide to develop a plan for yourself and relentlessly follow that plan with discipline… you’re choosing a path to follow.
On the other hand, if you decide to not come up with a plan…
… or you have a plan, but can’t muster the discipline to consistently follow through with your plan…
… then you’re also choosing a path to follow.
And which ever path you choose, there are always results waiting at the end. You’ll just need to decide if the results you’ll get at the end are the ones you wish you got.
If you don’t make a plan for yourself; life will, the banks will, the economy will, your boss will… you get the idea.
Bottom line: Make a plan for your money, otherwise someone else will.
That’s all for today, my friend. We’ll continue in the first section of Page 22 of the book tomorrow.
See you then.