When creating a plan for any significant life decision, such as choosing a career, getting married, or buying a car, we must spend hours reviewing lists to determine priorities and timing. We must have clarity as we develop our essential plan. In his famous book, Essentialism, Ewen McKeown suggests that while sorting out priorities, we must decide what not to do while focusing on what we must do, and that “When we really have clarity of purpose, it leads to success.”

A good financial plan is multi-faceted. That is why it needs to be developed and governed by a financial consultant. In his latest best-seller, “The Total Money Makeover”, Dave Ramsey notes: Build wealth. Invest and benefit from expert counsel from financial consultants with a proven track record of success.

Here are some priorities to achieve financial security – priorities that one must organize well:

1. Have emergency funds on hand. Save approximately three months’ wages. This can be particularly helpful in an emergency.
2. Eliminate all your bad debts. List your credit cards, smallest to the most significant balances–then pay off these debts, from the smallest to the largest, regardless of interest or amounts, one at a time. Make minimum payments on the rest. This will encourage you as you see each card being paid off.
3. Save for a home downpayment. Save for a down payment or cash purchase of a home. If you have a home, aim to pay down the mortgage, especially now when interest rates are low.
4. Save for your children’s college education. Your child can’t get much of a job these days without an education, though it is not necessary if he or she creates a great business. However, not everyone is Bill Gates or Steve Jobs.
5. Build your retirement nest egg. Begin investing for retirement early to allow your investments to grow over time. Retirement lasts longer for many healthy retirees, who live longer, with some enjoying retirement for 30 years or more.

Source: The Total Money Makeover. Dave Ramsey | Essentialism, Ewen McKeown