Patient and Disciplined Saving

Good Book With Great Money Tips

I came across a book entitled How Money Works: Stop Being A Sucker by Tom Mathews and Steve Siebold.

It was actually given to my family by my wife’s coworker.

After reading it I definitely think that it is a great book for all young people and anyone else looking to add a little knowledge about money.

It is any easy read at just over 100 pages and not overly technical at all.

I finished it in less than a day.

While I’m happy that there was nothing new in it for me, I still really enjoyed it and am going to have my kids read it.

It is certainly a good introduction for people starting their independent financial lives.

I also think that it is a great place to start to find other areas of personal finance that interest you so that you can do a deeper dive to educate yourself.

To me it also reinforces the message that we have to start our children’s financial lives earlier because time is by far the most important thing that we have when it comes to money.

We don’t have to be perfect or take uncomfortable risks if we use time effectively!

So, check out the book and pass it on if you like it.

I’ll be donating my copy to our public library when we are done.

If you like this post, also feel free to check out my other Blog here.

Make Your Money Work For You (and Your Kids)

The most important thing that you can do for yourself and especially for your children is to get your money to work for you.

The way to do that is through the magic of compound interest.

Compounding interest is one of the most powerful forces in existence but it takes time.

The earlier that you can plant that initial deposit nugget and start the process the bigger the payoff will be.

Twenty years is the rough target timespan when growth starts taking off and it gets fun to watch.

So, getting started as early as you can is the key.

Even if it is only $50 to $100 a month, it can turn into a life changing amount if you can just give it the time it needs.

If you can give it 40 years you will be rich and if you can give it 60 years you will make your entire family wealthy.

It is math.

Sixty years seems like an impossible and unrealistic timeframe to just let money sit and for many it is if we are already adults.

But that is where we can give our kids a advantage.

When they are young even just opening a savings account will help start the process that can grow into a bigger deposit that can be transfered into a low cost index mutual fund later.

That is what I’ve done with my kids.

So, get something started today even if it is just opening a savings account to start building an initial deposit to put into a more robust investment later.

Make your money start working for you now so that it picks up the heavy lifting for you later down the road.

To see the math of what growth can look like check out my previous posts.

Also, if you have a young reader in your life check out The Fairies of Oylara children’s book at your favorite online retailer. You can check out that blog here.

The Table that Changed my Life

When I was 22 and about to graduate from college I attended a seminar about where to place investment money. A table was shown early in the presentation that I can say literally changed my life. It has been the defining philosophy of my approach to money.

The table was made up of five columns. The first column was the “Age” column starting at 18 and going all the way down to 65. The next two columns were “Annual Investment”. The last two columns were “Investment Return Total”.

Overall the columns represented two people. The first person began investing $2000 a year starting at age 18 and stopping after 10 years at age 27. From that point, after an overall investment of $20,000, that person never put in another dime.

The second person starts their investment of $2000 at age 27 and invests every year until age 65 for a total of $78,000.

With an average of an 8% return the person with the most money at age 65 was the first person who started at age 18.

In fact, despite all the money that the second person puts in every year, they are never able to catch person number one.

That is the power of compounded interest.

I remember seeing that and being completely blown away. I had absolutely zero money saved or invested at that point, but I resolved at that moment that I was going to get started immediately because I was already four years behind.

I also understood from the table that the absolute most important money was the money that was put in early. As many of those dollars that I could put in were the ones that were going to be supercharged and make the difference 40 years down the road.

I can say that overall, by any measure, it has been successful. I’m not quite 65 yet but I’m well ahead of that table and if what I read online is correct I’m ahead of most of my peers.

You can find the table that I talked about online or it is easy enough to create it on your own with a spreadsheet program. I actually encourage you to do it.

If you are behind, don’t get down. It is never to late to start saving. You do what you can. But pass along lessons, especially to those who are younger. You won’t become fabulously wealthy, but you will have security and peace of mind.

If you like this blog, please also check out my fitness blog at Blog.GoMe.fit.

My 2 cents for Financial Literacy

When I was 22 years old and just about to graduate from the Air Force Academy, I attended a mandatory financial seminar that changed my life. The seminar was not part of the formal curriculum but the school was forunate enough to have a former stock trader who was now a member of the faculty. All of us graduates were about experience a considerable increase in pay from being a cadet to becoming a 2nd Lieutenant but most of us had never lived completely on our own. We had gone straight from living at home to a very regimented and control environment at the Academy. Most of us didn’t really have a clue about any long term strategy for our money.

The speaker was amazing and I still remember everything from that evening. He started with the basics of what was the difference between stocks, mutual funds, bonds, CDs, and savings accounts, and moved pretty quickly to what we should be doing right now to plan for the future. It was exactly what I needed to hear and it had a profound inpact on me. It changed the way I thought about money and gave me a goal to work towards. It also shaped how I approached opportunities and risks.

I’m happy to say that by most measures I read about online I’ve been successful. That is not to say that I’m retired early and full of secret tips and opportunities. I’m not. I still work and I’m still saving, but I don’t stress about making ends meet. I have security in the form of savings.

I’m writing this blog for two primary reasons. First, I’d like to share what has worked for me. In my case it can be summed up with starting early, being diciplined, and, most importantly, being patient. And second, it is something of an instruction manual to my kids who are still young and any other young person out there that is interested in learning about money.

Schools don’t teach this. However, as early as possible is when our kids should be starting to save. Compounded interest is one of the most important things a person can learn about when they are young. It harnesses the power of time and works for you every second of every day of every year. It starts very slowly but eventually it is like a rocketship if you just give it enough time. There would not be any retirement crisis in this country if we got our kids to learn about saving as early as we can. This blog is an attempt to do that.

I hope that you enjoy.