Lifestyles of the Rich and Famous
What You Don't See on Lifestyles of the Rich and Famous
Armstrong Williams
December 9, 2005
What can derail you from building real wealth over the long-term and achieving your financial dreams? The biggest mistake people make is discounting their future years. Bad move when it comes to your finances. You have to take responsibility now. Make a strict budget and stick to it. Don't get caught in a cycle of credit debt that prevents you from saving for the future. Do what I do: right off the bat, I invest 12% of my earnings into retirement savings. I don't even treat that money like it's mine. It belongs to the future. I make no exceptions. You shouldn't either because with the possibility of social security going bankrupt, we're all going to need it.
Every person can and should start planning for the future today. Sadly, many people postpone planning for retirement. Either they don't want to take time and effort away from their present activities, or they assume that they lack the financial abilities to be truly successful. Neither reason is valid.
You know, I've often thought that wealth management is a life skill that ought to be taught in the schools, right alongside math and science. Every high school in this country should teach kids the simple steps they can take to ensure long term financial security. Every graduating senior in this country should know the basics, like how to establish a bank account, the importance of saving cash for the future, shopping for the best deals, the benefits of budgeting and long term investing. Our schools need to teach kids to take personal responsibility for their futures.
Instead, we blast them with images of lazy and egregiously gluttonous movie stars who live like flamboyant fools. Our high-consumption, impulse-driven society loads them up on get rich quick stories. We create a culture dedicated to buying on credit. We have TV shows dedicated to touring famous people's mansions and gawking at their tricked out cars. The result: instead of competing with the guy next door, our generation is competing with the richest people in the world. That's the image of success they've been bombarded with. That's what they feel they need in their lives in order to feel successful. Can anyone be surprised that our kids worry more about saving money for bling, than for saving for retirement? Until we make financial planning a priority in our schools, kids will continue to spend more time researching cars and TV's than planning for the future
Thomas Stanley and William Danko wrote a great book called The Millionaire Next Door. The book doesn't profile movie stars, athletes and entertainers. It's not about software engineers. It's about people like you who have earned moderate amounts of money and retried rich. How are they able to accomplish this regardless of their socio-economic background and education? Real simple. They didn't take extravagant vacations. They lived well below their means. They didn't try to keep up with Bill Gates or Oprah Winfrey. They avoided debt and impulse spending and didn't become slaves to their credit cards. And these very middle class families had millions to retire on.
Really, it comes down to daily financial management. You have to prioritize your financial expenses. Instead of taking out loans to buy a larger home or a flashier car, make it a point to live below your means. Never go into credit card debt for today's needs and make it a point to live well within your means. Work to ensure you have some financial padding to cover emergencies such as illness, or temporary unemployment. Most importantly, set aside 12% of your earnings for the future. Then make sure you grow that retirement savings by diversifying your risks, and investing with a sound long term strategy. That's the surest way to join the ranks of America's millionaires. Of course, you'll never see that common sense bit of advice on Lifestyles of the Rich and Famous. But it is the best way to enjoy better and financially secure lives down the road and pass down intergenerational wealth to your children.
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