Did you ever have a financial role model growing up? I did not. I had “learn-from-my-mistakes” role models, in that I decided I never wanted to live in the way that I grew up and made a voracious effort to work my ass off and live frugally in order for that to never happen. Some days Chris asks me if I am still on that road and if I will ever slow down and realize I can chill a bit.
It is an interesting conversation (well maybe to me). Who impacted how you view money? Did you ever have a financial role model? Did you grow up watching Suze Orman on TV telling you when you might be DENIED? Were you given everything, and never taught that money does not grow on trees, and that there are consequences to racking up a crazy amount of credit card debt in the tune of never freeing yourself from the monthly payments? Or, did you learn how to know about your net worth, an emergency fund, and the importance of your credit score? Additionally, that your credit score can also be a causing factor in getting a job or not?
Money and finances are a reoccurring blog topic for me. Somehow over time money and sex seem to be taboo topics. No one really wants to talk about either. And, yet “Fifty Shades of Grey” became a mainstream movie (not without some backlash) what will be the movie about money that potentially starts the conversation amongst us? Somehow I think that movie will not be of much interest to the masses. Yet, how do we actually shift the world to start taking care of itself?
This recent Daily Worth article shares one woman’s experience and what she learned from her dad, or…like me what she learned not to do. Her dad is now retired and has to live on a fixed income. The potential for many who do not plan accordingly for the future, save, and approach retirement in a way that allows you to really “retire.” Chris and I look at today and what we save as a way to prepare for our future. For a time when we hope to have been savvy enough to find a point in time when we can make the choice for ourselves rather than be forced to work past relevancy. That way we can pamper our family and truly enjoy life.
We all have to start somewhere, but somehow I think many just never start. Or maybe it starts with who our financial role models are and what they teach us about today, tomorrow, and the future.
Money is on the brain this week. It is official — the early bird does get the worm. I recently came across a Dave Ramsey money article that especially peaked my interest. It basically is the simple truth about money that almost all of us probably know. Yet, the visual he shared just hits you smack in the face.
I do not want to steal the visual from his website, so I will explain and link back to his site for the full picture. Meet Ben and Arthur. Ben starts investing at age 19 and puts $2000 in an account each year for 8 years straight and then does absolutely nothing with the account until he retires at the age of 65. A total investment from the ages of 19-26 of $16,000. A lot of money to put away in those early years of his life. Arthur begins investing $2000 when he is 27 years old and continues to put $2000 away from 27 to when he retires at age 65. Arthur invests a total of $78,000 over 39 years. A difference in $62,000 in the amount that was actually put away between Ben and Arthur.
The result: at age 65 Ben has $2,288,996 and Arthur has $1,532,166. Ben came out $700,000 ahead by starting 8 years earlier and only put away $16,000. Compounding interest is an amazing thing. How do we spread the word? I do not know many 19 year olds that a) care about investing, b) truly understand compounding interest, c) have $2000 a year they can or want to spare.
Why not have a prerequisite that you have to complete a personal finance class to make it out of freshman year of college (no matter what your major). Or maybe it is a class that every high school graduate must take (since many might never go to college). The class could teach many types of life skills, and maybe those that truly understand it might actually decide not to purchase that video game they are dying to have and rather put a bit more into their retirement.
To think that all it took was $16,000 for 8 years, rather than $78,000 for 39 years. If I only knew when I was 19 what I know now, I might have made very different choices, especially thinking of that $700,000 difference at age 65. How do we make compounding interest sexy?