What is “Savoring” and How Can it Help You Build Wealth?
Starting a new journey can be exciting and scary at the same time. The key to making it more exciting than scary is to have a plan. At Snowball Wealth, we have created a financial roadmap to help you along your journey. We use this roadmap as a guide for our Premium members as we discuss how exactly to achieve each of the steps.
First, we want to emphasize the importance of having a well-thought-out plan and sticking to it. Whether you create a plan on your own or work with a professional, a well-thought-out financial plan will serve as your guide on your financial journey. Research has shown that people who have a financial plan often save more and have a better chance of reaching their goals. After all, if you don’t know where you are going –– how will you get there?
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In the first level of the Snowball Wealth Financial Roadmap, we focus on the foundations. Start by improving your mindset. Mindset is very important when starting any new journey, but it’s especially important if you want to change your relationship with money. You can start to work on your mindset by first understanding your relationship to money and then starting positive financial habits. In this level, you also need to create a solid budget that allows for positive cash flow. A budget is the foundation of a solid financial plan since it determines what comes in and what goes out.
If you find that your income is not enough to meet expenses, we suggest finding ways to increase your income first.
After you have a solid budget, you can save $1,000 for an emergency fund and start saving for retirement. We suggest you start by saving enough to get the full company match in any employer sponsored retirement plan. Finally, start to tackle high interest debt. It is important to target high interest debt will derail your plan to build wealth since you will be paying interest instead of earning it.
Once you have a handle on your cash flow and have taken care of high-interest debt, you will likely notice that you’ve built some momentum. That’s good! To keep the momentum going, you should start to build on previous positive financial habits. For example, if you got into the habit of paying yourself first- you can raise the bar by saving even more. At this level, you want to start to build a larger emergency fund to provide yourself a greater safety net. Once you start to invest heavily, you don’t want to be forced to withdraw money from investments during inopportune times. Having a 3-6 month emergency fund can help you avoid doing so.
Next, you want to start investing more aggressively for retirement. Many experts suggest saving 10-15% for retirement. At Snowball, we suggest saving 15% as the minimum and more if you can. The reason is simple: the earlier you get started investing and the more money you invest, the more time you allow compound interest to work in your favor. Once you are saving as much as you comfortably can for retirement, you can focus on paying off low-interest debt. Remember, you don’t have to pay off all debt before you start building generational wealth.
This is the level that most of us strive to reach on our financial journey. It’s the level where we have become mostly debt-free (we may still have some healthy levels of debt) and are thinking about our legacy. On this level, you can start investing outside of retirement. It may include stock market investing, saving for your children’s college education or even investing in other ventures. Whatever you choose, it is the level of which you are ready to start thinking about the next generation.
As you reach level 3, consider reflecting on how far you’ve come and set new goals for yourself. Remember that each level comes with a new set of challenges. Creating a plan allows you to plan for these challenges.
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