Day 1: Decide You Are Going to Do This No Matter What

Your future is entirely up to you. You can make the changes necessary to build up a nest egg and retire comfortably. Your first step is deciding that you are going to do this — no matter what. It may take some drastic changes. Friends and family (even a spouse) may try to talk you out of the changes you’ll need to make. Don’t let them distract you from your goal. Imagine what it will be like to be financially secure. Now, make a commitment that you are going to take baby steps until you get there. Write your commitment down, and read it each and every day.
Months 1 to 3: Begin a Bare Bones Lifestyle

You can short cut your way to your financial goals. It is not easy — but it’s worth it. Your first priority is to cut expenses so that you have extra cash each and every week and month.

If you employ every possible way you can think of to spend less it will powerfully accelerate your ability to save. It entails living on next-to-nothing while you get out of debt and build up savings. Rent a room instead of your own place — even if you are a couple. Take public transportation. Shop at goodwill.

Cook rice and beans at home. Don’t get cable TV or a cell phone. If you are willing to live a bare-bones lifestyle for even a short while you’ll be able to watch your debt go down and your savings pile up. The way to get through it mentally is to remember that it’s not forever.
Month 4: Develop a Tracking System

Find a way to track your spending, month end debts, account balances, and anything and everything related to your money. Tracking systems can be as simple as writing down month end savings account balances and total withdrawals, or as complex as using budgeting software to categorize spending. I prefer a simple system. The key is finding a way to organize your finances that works for you so you will stick with it. When you track things you can patterns over time and spot problems quickly. It is also a powerful motivator to be able to look back and see the progress you have made.
Months 5 to 12: Save All Your Extra Money

Now that you’re spending less start putting money away in a savings account or other safe investment. Don’t worry about investing it. That is for later down the road. Right now you need to get comfortable having money in the bank. Challenge yourself to accumulate more and more.

Each time you go to make a purchase, picture how much your savings account balance can continue to grow if you skip the purchase. Remind yourself of the commitment you made and that you want financial security as quickly as you can achieve it.
Year 2: Replace Money Wasting Habits With Money Making Habits

Money is out there to be made. You have money-wasting habits that could be turned into money-making habits. I don’t care if it is picking up aluminum cans for recycling at five cents each — there is something you could be doing with your spare time to make money. There is an added bonus that comes from working more; it gives you less time to spend money. Find a way to eliminate a few hours of dilly-dallying around from your week and replace that time with a way to earn part-time income or a way to learn new skills to increase your future earning potential.

Can you get better at your trade, change jobs, learn a new skill, or improve your sales abilities? Talk to people who make more to find out what it takes. Go to night school if you need to, or take online classes. Don’t forget about the importance of social skills. Maybe you have the right technical skills but your people skills need work. Ask your friends, co-workers, and boss for honest feedback. This is the time to put your ego aside and make the changes necessary to get ahead.
Year 3: Read a Financial Book a Month

Go to the library and find one money related book to read each month. It might be about making more money or about investing. It could be about building wealth through real estate, or perhaps about how to improve your skills in your career. You may not understand everything you read. That’s ok. If you stick with it, you will absorb knowledge.
Year 4: When You Make More, Don’t Spend More

As you start to make more, it is far too easy to begin to spend more and more until you spend yourself back to broke. Avoid this by continuously monitoring your financial situation according to the tracking system you set up in year one. It is also powerful to continue to read your commitment to yourself that you wrote down. You are doing this for you. You’re worth it.
Years 5 to 10: Repeat Steps Above as Needed

If you’ve followed the steps above, by the time you get to year five you are well on your way to financial security. That doesn’t mean you can get lazy. You don’t get fit or stay in shape, by exercising a few times a year. You have to do it regularly. This applies to your money habits too. Financial success is about building habits that you stick with for a lifetime. Now that you’ve had a few years to build good habits it is time to figure out how much you need to retire. Then you reset your goals and apply the steps above toward your retirement goal.