If you don't yet have one month's income saved for emergencies, then start here. Lack of savings poses the greatest immediate risk to your family and your finances, so that's why I recommend you tackle this first.
While some say that your first emergency fund should be just $1,000, I don't feel this is enough for the kinds of emergencies that most families will likely incur. Instead, I recommend saving one month's net income.
The Goal: Save one month's net income for emergencies. Come pink eye or diaper blow outs, complete this goal within no more than 3 months. Your family's security is at risk until you do.
Great! You have at least one month's income saved. Now it's time to tackle your non-mortgage debt.
Imagine what you'd be able to do without that $300 student loan payment or the $400 minimum payment on your credit card every month? Once the debt is gone and you free up that extra money every month, your financial outlook suddenly looks a whole lot brighter.
The Goal: Pay the minimum on all your debts. However, add an extra monthly payment of at least $50 per month to the smallest debt. It's easy to pay off debt months or years faster, even by making small extra payments.
If you're expecting, now's the time to stockpile as much cash as you can.
Because there are so many possible costs associated with having a baby from medical care and baby gear to possible maternity leave, it's essential to build a substantial emergency fund. This might be a good time to consider paying the minimum on your debts for now and focus on saving.
The Goal: That clock is ticking. Add as much as you can to your emergency fund baby your baby arrives to cover as many of the possible costs as you can without adding to your debt.
You're debt free! Congratulations! That's something only a very small percentage of families ever achieve. Take advantage of your lack of credit card bill and car payment to build up a 6-month emergency fund as quickly as possible.
If a medical emergency or unemployment happens to you, you'll be prepared, so you can focus on your or your loved one's health or finding a great new job - without so much financial stress.
The Goal: Save 6 months of expenses, so you have enough to cover the necessities if you suddenly had no income.
Here's the deal. If your family's take home income is less than $4,000, it's going to be very difficult for you to consistently stick to a budget, pay off debt, or save for the future.
I realize that might not be what you were hoping to hear, but don't worry! You can do this. When my family began our journey to debt free, we were making only $3k a month. But we didn't let that stop us. We relentlessly found new ways to make more money and paid off our debt in less than 9 months. You can do this!
The Goal: Budget fiercely to ensure that you spend no more than you make (no matter what), while working on growing your income. Allow yourself no more than 6 months to get to at least the $4k per month mark. Once you can cover the basics, then you can start thinking about long-term financial goals.
Because your family is in the middle of a health crisis, now's the time to stockpile as much cash as you can.
As you know, healthcare bills can pile up fast. That's why it's essential to build as substantial an emergency fund as possible. This might be a good time to consider paying the minimum on your debts for now and focus on saving.
The Goal: Add as much as you can to your emergency fund to give you more options as you care for yourself or your loved one. Once you get through this, then you can tackle other long-term financial goals.
Congratulations! You're debt free AND have a 6-month emergency fund in place. That's something only a very small percentage of families ever achieve. Now's the time to plan for the future.
If you don't yet own a home, you might consider saving for a down payment. Otherwise, you take take advantage of your lack of car loans and credit card payments to save for retirement.
The Goal: You're on a roll! Prepare for the future by saving for retirement or saving a down payment for a house.