In 2011, I had the crazy idea to run my first marathon. That’s 26.2 miles—and I needed to do it in less than five hours. Oh, and I hadn’t run more than a few miles in several years.
I know . . . I obviously wasn’t thinking clearly. But once I paid the entry fee and shared my goal on social media, I was committed.
So how do runners train? One step at a time. They start small and slowly increase their mileage. They create little benchmarks of achievement.
The Bible tells us, “Whoever can be trusted with very little can also be trusted with much” (Luke 16:10, NIV). It’s no different with finances.
Have you ever felt like your financial life is a marathon that you’re in no shape to run? Well, I’ve been there. It can be paralyzing if you don’t know where to begin! But just like with running, you have to break down your goals into tiny achievements. I call these the Baby Steps.
They’ll create natural benchmarks for celebration, and they’ll keep you from backtracking or losing focus along the way. Following them in order is crucial. We don’t run 16 miles before we can run two. Ready? Here they are:
Baby Step 1: Save $1,000 in an Emergency Fund
A basic emergency fund of $1,000 ($500 if you make less than $20,000 a year) in a money market account can keep you from going further into debt if an emergency arises. And believe me, it will. By the way, an emergency does not include the Mountain Dew you’re eyeing at the gas station.
Baby Step 2: Pay Off All Consumer Debt
Using the debt snowball method, list all your consumer debts from smallest to largest. Pay off the smallest debt first, then throw that payment at the next largest debt. Keep this up until they’re all paid off.
Baby Step 3: Increase Your Emergency Fund to 3–6 Months of Expenses
Eliminate the possibility of falling back into debt ever again by fully funding your emergency fund.
Baby Step 4: Save for Retirement
Invest 15% of your pre-tax income into retirement plans. I recommend good growth stock mutual funds within a 401(k), 403(b) or Roth IRA.
Baby Step 5: Fund Your Kids’ College Education
Set up Junior for financial success by keeping him away from student loans. Education Savings Accounts (ESAs) and 529 plans are great ways to save. Just make sure to choose a plan that keeps you in complete control of your money, not one that adjusts your investments for you.
Baby Step 6: Pay Off That Mortgage!
Start dreaming about what it would look like to have no more payments, and be aggressive about making that your reality. Pretty fun, huh?
Baby Step 7: Live and Give Like No One Else
Now that you have your own house in order, start thinking of crazy ways to bless others with outrageous generosity. This is the most fun you can ever have with money, so leave a legacy of giving!
Whether training for a marathon (by the way, I did finish mine in less than five hours) or cleaning up our finances, milestones can help us achieve big dreams.