Posted by M.S. on May 9, 2009
When our children were born and people wanted to get a gift for the baby, we asked everyone to give the baby the gift of money that we would invest for them.
We knew the immense power compound interest would have over time and wanted our offspring to take advantage of that fabulous wealth builder. Most people honored our wishes! We set up a stock index mutual fund along with a general stock mutual fund for each child and start investing.
When the children were old enough to start working, we wanted to really encourage their frugal living and investing, so we made them an offer they could not refuse! We said for every dollar they contributed to their savings, we would match it–so they would double the amount of money they had to invest!
We set up a spreadsheet that we reviewed with them periodically to demonstrate how much richer they were getting. They became much more enthusiastic about saving their hard earned money after they started to see how their investments were earning them “free money” they didn’t have to earn by working.
On the day our children graduated from college, we switched the entire portfolio into their name! They EACH had a nest egg of over $25,000 to begin their adult lives at 22 years of age!
That’s a whole lot better than a bunch of smashed up old toys and NO money!
Wouldn’t that be a fabulous graduation present for your child too?
Posted by M.S. on May 5, 2009
When our children graduated from college, we reflected on what words of wisdom we could share to guide them on their own journey towards financial prosperity. We believe it could be boiled down to these 4 simple steps.
#1. Define how you want your life to look. Be very specific. Do a dream board where you gather pictures from magazines and create a photo montage of your future life. Show the dollar amount you want, the family you aspire to, career goals, homes you will buy, the fabulous travel you intend to do, etc. Now that you know what you are aiming for, you should set concrete financial goals to get there. Set a 1 year, 5 year and long range goal and start working hard and saving to achieve it!
# 2. Pay Yourself First. The minute you land a job, enroll in the company’s 401-K program and contribute the maximum amount. You have 40 years for the money to grow, so allow the power of compound interest to work for you and reap the huge benefits of all those years of growth. Alfred Einstein said compound interest is the 8th wonder of the world! If you are serious about becoming wealthy, you must save a much larger percentage of your income than the average American. Start with saving and investing 20% and go up from there! Do you want to be rich or don’t you? You will not get wealthy by spending all your money on junk. Learn to cook and make your coffee at home. Ok, splurge once in a while.
#3. Only buy appreciating assets, whenever possible– NOT depreciating assets. That means only buy things that will generally go UP in value over time- that is things like houses, stocks, mutual funds, etc. You can buy them now at fire sale prices (unless you think the world is coming to an end.) Do not buy loads of designer clothing and shoes, fancy overpriced cars, etc. You are not Don Trump! Don’t try to live like you are! You have a much better chance of getting wealthy if you defer gratification and wait to buy all those fun toys when you actually have the money to afford them! Now is the time to save and build up your nest egg. We know this is contrary to what most people do! That’s why most people have NO money!
# 4. Take care of your body! What good will wealth do for you if your health is a wreck? Eat less, exercise more, reduce stress. That’s the best investment you will ever make!
Now get going!
