Under 35 Starting Out
Start earning 10 and spending 9. In the book "The Richest Man in Babylon" the author talks about this being the first strategy you need to do to get control of your spending and start having
money when you need it. A family budget is a must.
You must stop living from pay check to pay check. No matter how hard it is or how little you earn each week, it all starts here.
If you were to go out and buy a new SUV for around $ 30,000 for seven years you would make payments of $529.58 per month (12% interest). At the end you would have an investment worth about $ 3,000.
If you took the same $529.58 per month for the same amount of time and invested it at 8% you would have $59,373.19. If this were left to grow for thirty years you would
have $ 597,000. New cars are one of the biggest budget busters. Buy a classic and keep it fixed up. You will look like a car buff and everyone will admire your car
just like they will a new one. The simple fact of compound interest can work for or against you. It really separates those who will become slaves to their finances (you
know, work two jobs - to pay the bills) from the person who will accumulate wealth.
You must start early. If you put aside $2,000 per year in an Individual Retirement Account (IRA) earning 8% for just the 10 years from age 25 to 34 you could have
nearly $ 315,000 by the time you reach 65. If you wait until you are 35 and then put aside $ 2,000 a year from age 35 until you are 65, you will only have about $245,000.
A novel idea is if when you have a baby, suggest that key family members give the baby a few shares of stock in a mutual fund, that is a growth fund, instead of baby
clothes. The mutual funds will last longer then the clothes. Keep this stock until you "baby" goes to college and you can avoid the problems of the 45-54 year old crowd.
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