By Matthew Broom
If you want to spend less than you make, you need to budget.
Imagine being airdropped into a fire scene with no training. Would you know how to use the tools of our craft? Would you know how to pump a truck? Would you know how to run command?
It would be an impossible task full of obstacles. But, the things that would be obstacles — hose, pumps, hooks and halligans — become the tools to get the job done after obtaining education, training and experience.
A tool is a thing used to carry out a particular function, whereas an obstacle is a thing that blocks one’s way or prevents or hinders the process.
If you know how to use a halligan, you can carry out the function of forcing a door. If you don’t, it will probably just hinder your progress.
Retirement planning can be an overwhelming responsibility, and that feeling of overwhelm turns one of your most excellent tools for achieving financial freedom, your workplace retirement plan, into an obstacle. You were probably “airdropped” into planning for retirement with no education, training or experience on making retirement decisions.
Like our fire ground tools, the difference between a financial tool and a financial obstacle is education, training and experience.
Education, training and experience
You spent 16 weeks at recruit school learning the tools of the trade.
How much time have you spent learning how to budget? How much time have you spent learning about your workplace retirement plans? How much time have you spent learning about insurance policies that will pay your family’s bills if you were to die on the job?
As a financial planner, clients paid me for financial advice, but often, I found myself pondering a quote from Good Will Hunting:
“You wasted $150,000 on an education you coulda got for a buck fifty in late charges at the public library.”
Nobody is paying me $150,000 but the thought rings true. You could probably educate yourself to the level of a competent Certified Financial Planner with a buck fifty in late charges at your local library.
And all of the things you view as obstacles now — Defined Benefit Pensions, Defined Contribution plans, Zero-Based Budget, Term-Life Insurance, Tax-free vs. Tax-Deferred, and the list goes on — turn into tools that give you leverage to get on the path to retirement success.
Get some perspective
It’s okay that retirement planning is overwhelming. At no point are we taught how to plan for retirement. We don’t learn how to budget our income. We aren’t taught what types of insurance are appropriate. We don’t learn to avoid consumer debt. We don’t understand the power of compound interest.
For whatever reason, home ECONOMICS turned into a baking class instead of a personal economics class.
That being said, your perspective moving forward will be of utmost importance.
The saying goes, “you don’t know what you don’t know.” Now you know what you don’t know so take responsibility for your financial future and educate yourself.
Where the head goes, the body follows. Perceive yourself as an individual capable of achieving financial freedom and begin to take actions that bring that to fruition.
There are four rules for financial success:
- Spend less than you make.
- Save as much as you can.
- Avoid financial ruin.
- Live your life, not theirs.
So, educate yourself on how to do these things.
If you want to spend less than you make, you need to budget. Listen to Dave Ramsey. Read “The Total Money Makeover.” Check out YNAB (You Need A Budget). Read the rules on the IRS website. Read articles on The Simple Dollar, Nerdwallet, Get Rich Slowly. Listen to podcasts. The resources are endless.
Google how to do a budget and see what comes up.
If you want to save as much as you can, you have to understand your options. Figure out what kind of plans you have and google those things. At my fire department, we have a 401(a) Money Purchase Pension Plan and a 457(b) Deferred Compensation plan.
Matthew Broom is a firefighter/paramedic with Gwinnett County (Georgia) Fire and Emergency Services. He has been a member of the Hazardous Materials Response Team since 2016. Prior to joining the fire service, Matthew graduated with a B.B.A. in Business Economics from Georgia State University. In 2017, he returned to school to complete the Certified Financial Planner™ coursework at the University of Georgia. Since passing the rigorous CFP® exam, he has been focused on increasing financial literacy in the firefighter community. He is also the host of The 24/48 Podcast which is focused on helping firefighters find success on and off the job.
Photo By Andrew Neel