Who could forget the movie, “What About Bob?” Dr. Leo Marvin, played by Richard Dreyfus gives his new multiphobic obsessive compulsive patient, Bob Wiley, played by Bill Murray this sage advice… “Baby steps.” So, before Bob can accomplish some of the bigger things in life, he needs to focus on the smaller things by taking… baby steps.
You and I can also benefit from this concept in our personal financial management. We have a tendency to want to focus on the more exciting parts of finances – hot stocks, hedge funds, IPOs, options, futures, commodities, complicated annuities, rental and investment real estate and insurance policies with bells and whistles. While there is nothing wrong with these interesting topics, we need to remember that, as Dr. Stephen Covey puts it – “First Things First.” As Dr. Leo Marvin puts it – “Baby steps.”
The financial baby steps are… budgeting, debt/credit education, doing a will, insuring catastrophic risks, owning a primary residence, contributing to a 401k, funding a Roth IRA if you are able and learning how and why to give to those in need. Exciting financial planning concepts are great when used properly, but they’re just plain not appropriate until you’ve mastered the financial Baby Steps… and that is something that YOU NEED TO KNOW.