When I was a freshman in college, I read a book called The Millionaire Next Door. It is a fantastic book that describes how to be wealthy and what it means to have wealth. There are many different definitions of being rich, but the most important thing is understanding the differences between life styles of those who reach their financial goals and those who do not. In order for me to discuss this with you, let's go over some basic information from the book. First off, if one million dollars is your goal or you want to be financially independent by saving this much money for retirement then there are three basic steps you need to take: 1) start early 2) save consistently 3) invest wisely
Here's what they mean:
Start Early - One of the main reasons that people fail financially is because they don't start saving until they're older. I learnt what I've learnt about savings early in life, but I didn't really start saving until I was 26. There are two reasons for this: The first is that many people are not taught about money when they're young. The second is that people think they will be rich, but this rarely happens because if you become rich later in life then you will have to work late into your life and might die with a lot of money and no one to give it to. This is the main reason why some people never get started with their retirement planning. However, some of us do so we know for sure what we need to do:
Save Consistently - After reading the book and doing research on my own I found out that there's more than just saving consistently; there's also spending consistently. If you save $3000 per month then chances are you'll be able to retire at 60 years old depending on where your getting your income from (Rental property vs W2 employment). Invest Wisely - If one million dollars sounds too far off or impossible, then start by saving $100-$200 per month if possible and invest it wisely (in stocks). By making these three steps part of our daily lives we can actually reach our financial goals! Now let me tell you how I did it: Step #1: Start Early - My family had always been pretty well off financially even though my dad was a school bus driver for most of his adult life. I was lucky enough to learn about money when I was in elementary school when I learned about finances from my parents. This will be a major benefit for me later on in life. I also got an allowance, but this didn't help me understand how to invest it. Therefore, I am glad that my parents had taught me the basics of finance by the time I was around 11 or 12 years old. Step #2:
I didn't really start saving until I was 26 when my savings account started to grow. During these years, I would save about $30 each payday and then after a few months of doing this consistently I started to save around $50-$80 per paycheck.
Invest Wisely - This is the part of retirement planning that you can get away with by spending less or more. If you know how to invest your money wisely then you don't have to waste it on expensive things like cars, expensive vacations, etc... In addition, if you can learn how to do something for free (like get free meals from restaurants which they give out on certain days) then that helps a lot! This is also how I pay for school - by getting free food from the cafeteria! How did your parents teach you about finances?
I'm going back in time with this one so maybe some of the people reading aren't old enough yet but some might know what it's all about so here we go!
