Smith 
When I first read "Total Money Makeover" back in 2003, I was thrilled to find another personal finance expert who shared my views on saving for retirement. One of Dave Ramsey’s key tips for investing is to get your free money first with your 401(k) match. After that, take advantage of the Roth IRA for its tax-free benefits, and then, if you can, max out your 401(k). This is the same advice I’ve been giving people since I became a financial advisor. However, my opinion has shifted over the past year.
I’ve come to realize that most people who save in their 401(k)s don’t really understand what they’re doing. Many simply let their employer decide their investments and never really grasp what they’re investing in. Does this sound like you? Because of this, I’ve changed my approach.
Now, I believe everyone should, if eligible, open a Roth IRA first. I’m a big fan of tax-free money, and if I could, I would max out my Roth IRA without hesitation. Sadly, I’m not eligible. Not sure if you qualify? Check out the latest Roth IRA rules.
You might be wondering why I recommend starting with a Roth IRA instead of a 401(k). Here’s my reasoning: I think people need to take a more active role in their investments. Opening a Roth IRA requires you to research where to open the account, how to fund it, and what investments to choose. At the very least, you’ll need to consult a financial planner to make sense of it all. This process forces you to take some ownership of your financial future.
Without that personal investment, you might just go through the motions and never truly understand where your money is going. Yes, there are flaws in this idea, and any tax expert could point them out. But here’s what I understand: I’ve spoken to countless people over the years who don’t know what they’re doing with their retirement savings, especially their 401(k)s. This has to change. Do you think Dave Ramsey will call me crazy? Let me know in the comments below.
