The realization kicks in around the time we are in our forties. We feel we have been working endlessly and begin to seriously contemplate retirement. Will we be financially ready in fifteen or twenty years?
Up to this point, we haven’t adequately saved. When we glance at our bank or investment statements, we feel like someone’s been stealing our money. But the stark reality opens our eyes. We don’t need to worry about anyone stealing our money. We do a good job of spending it. When we recklessly spend, we steal money from ourselves. The harsh reality is we exchange our money for every simple pleasure life offers us now. The practical reality tells us we don’t have to give up living and enjoying life to save money.
Let’s be W-I-S-E about the ways we save and spend while we enjoy life.
W – Wealth can be built up in multiple ways, both in our investment accounts and home (and other real estate). Putting yourself on “automatic” is the best way to accumulate wealth. In David’s Bach’s book, The Automatic Millionaire, “automatic” means setting up payments to automatically transfer into a savings plan. The concept is known as paying yourself first. The first 10% of your salary belongs to you (to be tucked and hidden away) with the remainder directed to other needs.
I – Investing for the long term is a slow and steady process. We talked about the rabbit and turtle analogy in the previous blog, Connect the Dots. Because things don’t happen as fast as we would like is not a reason for us to be discontented with the results. Think about someone dealing with a shoulder injury; the healing process cannot be rushed. A child born today doesn’t graduate from high school tomorrow. Because you invest $100 a month now, doesn’t convert you into a millionaire in a year. The world view believes everything should instantaneously happen. For certain things, like instant oatmeal which cooks up in two minutes or less, this is true but investing in the markets has its own philosophy.
S – Simply spend and borrow wisely. These two need your attention when everyone and everything whisper in your ear, “Why wait when you can have it now?” Television ads, Facebook posts, and marketers encourage us to part with our money. If we don’t catch ourselves when temptation knocks, we fall into its trap.
This point comes from the book, The Automatic Millionaire.
“If we didn’t have enough cash to buy something, we didn’t buy it. The entire time we’ve been married, we’ve never carried credit card debt. When we used the cards, we paid them off the same month.”
Can you say the same as Sue does? The interest paid on any unpaid credit card balance squashes dreams. We don’t want this.
E – Enjoy life. You are encouraged to dream, the very premise of this blog website. So don’t stop dreaming rather “chase” and “create” the very things you desire to achieve.
Saving for retirement does not require discipline when you heed the advice of making savings automatic. The discipline is only required to set up the process. Your future reality will then take on a life of its own. The reality of a comfortable retirement is yours to paint in the colours of your choosing. Do you see the endless possibilities?