Wealth Building Lessons

Most of us rejoice when we receive our paycheck. The first thing you probably do is go to the shopping mall to buy that latest gadget or pick out those nice pair of shoes you eyed in last week’s issue of Vogue. Then after paying your rent/mortgage, utilities, cell phone, groceries, car and other miscellaneous expenses, there just doesn’t seem to be much left over. If there’s anything remaining, you’re probably thinking about that other toy you have on your list. In the remote chance there’s still anything left over, the idea of investing is amusing at best. Sounds familiar?

Well, now is the time to make a commitment to investing in your financial future and decide to pay yourself first BEFORE paying your bills. Even an extra $100 per paycheck (if you’re like most people, you get paid every two weeks) can accumulate substantially over time.

For example, if you saved $2,400 a year (that’s only $200 per month) from the time you were 18 and invested it at 10%, at the age of 65 you’d have $2.3 million dollars. It sure doesn’t seem like saving $50 every week (for many people that’s less than the cost of their lunch) can amount to millions of dollars at retirement but that’s the reality of it.

On the other hand if you started saving when you were 35 and invested $1000 every month for 30 years at the same 10%, you’d only have $2.17 million at age 65.

If you think you can’t afford to save $200 per month, you should probably look at complementing your source of income. This can be achieved in many ways but obtaining another job (part-time) is probably the easiest way in the short-term. If you can work an extra 6 hrs every weekend at $8/hour, that equates to $192 per month. If you deposit the money into a 401k plan it will be free from any taxes. If you’re below a certain income limit, even money put in a Roth IRA or a regular IRA will actually generate a tax credit!

Don’t wait to start saving for your future. Time is your biggest ally. If you wait to be totally debt-free, you may never even begin to start saving. Always pay yourself first!

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