My frivolous and rather flaky sister did just about the smartest thing I've ever seen her do.
She is at that exact point in life that we all wished we had to live all over again. She just graduated from college. She got a job paying a very reasonable salary with great benefits. And she phoned her big sister and asked what she should do with all this money.
As a result of that conversation, she is automatically investing the max in her well-diversified retirement account. Of her net income, she is saving 10% for her emergency fund. She is saving 10% for short-term wants and needs, like cash for a used car. She is saving 10% for those irregular bills that pop up every once in awhile, like car repairs. She is saving 10% for long-term goals, like opening her own restaurant in 10 years and a down payment for her own home. Lest you are thinking that she is not using any money to pamper herself, she also has almost $1000 left to meet all her immediate needs and wants. She made another smart decision, one that I sure wish I had made. She is keeping her overhead low by moving back to the family home and paying a small rent.
After saving all that, my spend-happy sister still has $700 each and every month to spend on herself. Does she have to be careful with her $700 allowance? Not one bit! I told her to spend every last penny of it. Not only does she deserve it, but she can also afford it because she is already making all the right financial choices.
Can you sense that I really wish I were in her shoes? Don't you wish you were in her shoes?
We have all at one point or another wished we knew then what we knew now. I know I've certainly wished I had made all the right financial decisions from the start instead of having to go backwards and fix all my mistakes. After struggling for almost three years, I finally dug out of the debt hole, contributed 10% to my retirement account, and started saving 10% of my net income in an emergency fund. I also started a dialogue with my family about financial responsibilities. My baby sister listened. I am so envious of her and so very proud.
"My Story" is a regular feature of The Dollar Stretcher. If you have a story that could help save time or money please send it by mailto:MyStory@stretcher.com
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