You may have heard that life is a marathon and not a sprint. That statement is particularly true when it comes to saving for your future. Many people have found themselves ensnared in debt and living beyond their means to the point it requires them to continue their career longer than desired.
Like any good track coach would advise an elite runner, the focus should be straight ahead and the pace consistent. When approaching the finish line (retirement) kick it in to finish strong! One of the most effective methods of saving for retirement is to maximize the amount of time you have available in your life. Starting early allows you to save smaller amounts each year while compound interest does the heavy lifting.
To illustrate the previous point, let me introduce you to Ronald Read. His story is so inspiring. Mr. Read didn’t earn a significant amount of money in salary as a janitor but was disciplined in his spending. His lifestyle is not for everyone but serves as an excellent example to those who earn far more in annual income and can’t accumulate the level of wealth of this WWII veteran.
Mr. Read was frugal beyond anyone’s expectation. His life of austerity is not for everyone. He drove a second-hand car, used safety pins to hold his coat together and cut his own firewood well into his 90s. The catalyst to his success was that he was a knowledgeable investor and exhibited emotional control to hold his stocks during market contractions. Most of his individual securities were held for decades as discovered at his death.
No one suspected the lowly janitor to amass a fortune by the time of his death. His generosity benefited his local hospital and public library. The total amount of wealth contributed to these two organizations was $6,000,000!
How did this happen? By remaining calm during tumultuous market corrections and retaining his investments for the long-term, Mr. Read benefitted from years of growth on blue chip companies that paid good dividends. This approach combined with a lifestyle in which he seldom incurred debt and always “paid himself first”, created a multimillionaire on a very limited income.
This is the American Dream for many of us. Work hard, save money, make sound decisions and you may experience a similar story for your family to regale in the community. It is very admirable to leave a nice bequest to charity. However, I believe it is balance in your life that truly brings you happiness for a lifetime. By living within your means and saving for your future, you can enjoy family vacations, nice things and send your children to college. Balance is the ultimate key to a lifetime of cash flow and enjoyment.
If your family wishes to create its future in a manner that is balanced, contact a CERTIFIED FINANCIAL PLANNERTM professional. The key is to start early, keep a consistent pace and focus your eyes on the future ahead of you, it will be here before you know it. See you on the jogging trail!