We will have short, medium and long term (retirement) savings. Many Rich people get/stay rich by acting poor, while many Poor people got/stay poor by acting rich. So it is important to live within our means, or even better, below.
- First save have some Emergency Cash stored at your house. Start with enough to buy a weeks worth of groceries if the power & ATM's are out of service. This Emergency Cash link can give you some ideas on how much and why.
- Then save the equivalent of three months net income (minimum). Loosing a job is fairly common in today's job market, and this will protect your home, automobile, and more importantly, your family. I would keep about 2/3 of this in the bank, and 1/3 in cash at home in a hidden safe. There are some very affordable fire proof boxes and wall safes.
- At the same time, sign up for your company 401K for the maximum that the employer will match. For example, a small (5%) 401K savings deduction costing us $62.50, we will realize a huge savings of $192.31. This should generally be invested in a mutual fund that is appropriate risk for your age, but there are many options.
- Set up a budget and stick with it. Include savings as well as a modest Prepper Budget. The Beginner Prepper Plan has a starter budget for just over $500. You should also have several weeks worth of Food and Emergency Water, stored in your home. These links will assist.
- Short term savings for things like a car or down payment on a house are next. Don't buy new cars because they depreciate too much in the first year. Instead buy a 2+ year old model that will cost much less but should be in good condition for many years to come. The payments will be less, so take the difference between between the used car payment and the new car payment and save it to apply to your next car. When that savings account reaches a dollar amount sufficient for buying another car, then you can do so, but not before.
- When it comes time to buy a house, select one below your means. If you qualify for a $100,000 home loan (for round numbers and to make it easy to do the math), buy a $50,000 house and make payments as if it was a $100k house. Within approximately 5 years, you will own this house. Sell your $50K house, use this to make a down payment on your $100k house. Make payments as if it was a $100k loan, and again in about 5 years, you will have this $100k house paid for. Then take these house payments and start saving them, or at least 50%. At this point consider a Prepper Retreat. Building your own energy efficient solar powered home is worth considering. At the very least, you should have some Emergency DIY Power Supply for an Extended Power Outage.
- Where your home is located is important. There are Common Home Security elements however City Home Security is different from Country Home Security, and a country home with woods allows some Wilderness Survival potential as well as a Prepper Garden.
- In time, you have a paid for house, a car you bought with cash, money being saved for your next car, so now you are ready for investing. Diversity and regular additions to your investments are the key, but more important is that you start early. Let me explain why.
- Suppose two twin brothers start saving $2,000 per year. Brother 1 starts at age 21 and saves for 6 years. Brother 2 starts saving at age 27 and saves for 36 years. When they retire at 65 years of age, Brother 1 has more money than Brother 2, because of the magic of compound interest. This is how the Rich get richer by investing and loaning money to Poor people who borrow money to buy everything and get poorer.
- In our home buying example above(#6), IF we had financed a $100,000 house for 30 years and paid 7% compound interest, we would end up paying about $250,000. This is again, how the Rich get richer and the Poor get poorer. You want to be earning compound interest, NOT paying it!
- Stock Market Mutual Funds, Real Estate - rental property and about 10% Silver are my favorite investments, but there are many options that you can consider. You should consult a financial advisor on where to put your money. This should give you a few ideas.
For additional information see the following links:
Blog Table of Contents
Urban Survival Plan
Sustainable City Survival
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