Expert: Gina Boykin - 8/16/2007

Question
hello gina my name is antoine and im getting ready to start a new job with fed ex as a package handler to get my foot in the door.im currently im going to school to get my commercial driver lincence.ill only be working part-tme 4-9 in the morning for 8.00 an hour. i havent work for abot a year how can i get back in the game im married with two girl i want to make my family proud please help.

Answer
Hi, Antoine!

IT's great that you are going to school to improve your career!  I commend you on that effort, and hope that your family can be supportive (emotionally and spiritually) in the meantime.

The first step for ANYONE, regardless of income, is to create a budget.  People become wealthy based on spending less than they make, and investing the difference.  It's as simple as that...It's just the details that may get more complicated.

You can go to www.daveramsey.com and scroll down to the bottom where it has "useful tools".  Select "Budgeting Tools" and use one of the budget worksheets.  This process should be done with your spouse so that you are both aware, and in agreement, about how the money should be spent.  If there are some things you need to cut out to have money left to save/invest, try to eliminate them.

If possible, a great goal is to have 10% of the household income to set aside for savings/investments.  Do this ASAP, even if you're in debt.  Do this to develop a habit of "PAYING YOURSELF FIRST".  You will feel better, because you are treating yourself as the most important.  And you are more important than any creditor, utility company, etc.

During the first few months, this money should go toward an emergency fund.  This is very important because without it, any emergency will result in using credit cards - and this is NOT a good route.  Your emergency fund can go into a savings account.  Select a bank with a high interest rate like Emigrant Direct, ING, etc.  You can check out rates on www.bankrate.com.  As long as the bank is "member-FDIC", your money is safe.

If you can't set aside 10%, set aside 2-3% and try to increase by 1% every few months until you reach 10%.

Having an emergency fund will help the family feel more secure and will relieve some pressures on your part.  Usually, it is suggested to have 3 months of expenses in your fund, but you can work toward that over time.

Now you can move toward investing for your retirement and your children.

Once you're at the point where you have $25-50/month to invest, open a Roth IRA for your retirement.  The money you invest will grow tax-free until you retire.  If you need to take your contributions out, you can do so (after 5 years) without penalty or taxes.  A Roth can be opened with any major broker, but I would suggest E-Trade to you because it has no account minimums and no annual fees.

www.etrade.com

Look at investing in index funds to start, in your Roth IRA, because these are low-cost and don't require much research on your part.  An index fund is a fund that follows an index.  A well-known index is the S&P 500.  There are also bond index funds (follow the whole bond market) and world funds (follow international stocks).  There should be a description of the funds the broker offers on its website.

Here are two sites on investing and index funds...
www.indexfunds.com
www.investopedia.com

If you have any consumer debt (credit cards or car loans), pay the minimum on all but the card/loan with the highest interest rate.  For this card/loan, pay as much as you can until it is paid off.  Some advisors will say to pay off the card with the lowest balance first, because it gives you a feeling of accomplishment.  That is fine as well.

There are many wealthy people in America that made modest salaries.  They became wealthy by investing a portion of their money, and by paying off all of their debt- including their mortgage.  If you have a chance to read "The Automatic Millionaire" by David Bach, he discusses this in detail and may be a source of inspiration.  You can get it from your local library.

In summary, if you do the following you will be well on your way to wealth:

1.  BE SECURE - create an emergency fund, get a will, make sure you have adequate life/health insurance

2.  PAST/PRESENT/FUTURE - look at your spending habits (the past), create a budget (the present), and create a plan (the future) to become wealthy and leave an inheritance to your children's children

3.  PAY YOURSELF FIRST!!! - put aside money regularly in investments.  Make it automatic, by signing up for an automatic transfer to your savings account and to your brokerage account.

4.  BE FLEXIBLE - your plan may change from time to time, just stay focused on your goals

As a final note, I would suggest that you begin teaching your children financial skills even as you continue to learn.  I am not sure of their ages, but they can start their own business if they are at least 8-9 yrs old.  They should open up savings accounts and regularly make deposits, even if it's $1-2.

Here are a couple of websites for them as well...
PRE-TEENS/TEENS
www.moneytalks.ucr.edu
ww.addsup.org
www.younginvestor.com

KIDS
http://www.yacenter.org/kiosk_1/
www.ustreas.gov/kids


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