A Quiet Fortune: The Nike way — easier than you might think
Good grief, just start. Start with small steps. Do it today. Set a goal that you are going to be financially stable and go for it.
It’s easier than you might think: You’ll need about half an hour. Sit down today and call a bank. Set up a savings account if you don’t already have one. Then have your paycheck automatically deposited in the bank, and a portion of that check moved into your savings account. That’s it. Make the call.
The bank will give you about three steps to take, each one simple. Do it. Now you’re on your way to moving out of that mindset of “We can never get ahead” to “Someday we’ll … be able to afford a reliable car … buy a house … watch our money grow … not be afraid of what retirement holds.”
Like Nike says, “Just do it.”
Why? Because saving too little is the ultimate procrastination. We keep telling ourselves that we can do something tomorrow about our finances. But tomorrow doesn’t come. If we just allow a change of mind we will realize that when we ask our bank to put aside a percentage of our money, we honestly won’t miss it after a few months. Instead, we’ll begin to feel powerful over some of our financial worries.
Here are a couple of statistics that might hit home:
From the National Institute on Retirement Security:
• The vast majority of working households age 25-64 (80-90 percent) have retirement account balances that do not meet minimum savings benchmarks.
• About 44 percent of baby boomers and genXers are at risk of not having enough income to meet even basic expenses in retirement.
And from Lauren Weber in her book “In Cheap We Trust”:
• “Classical economics tells us that Americans should save more money outside their pension plans to compensate for greater uncertainty in the plans. Instead, the opposite has happened.”
• “Research shows that individuals who don’t grasp the benefits of compound interest are less likely to save.”
My friends, you can do this. You can look up “compound interest calculators” on the web and begin to understand the miracle of compound interest. Here’s an example: A worker makes $75,000 a year and gets 3 percent annual raises. She puts away 10 percent of her salary every year and earns 6 percent on her savings.
It will take her a full 31 years to reach $1 million. OK, not bad. But if she has just 10 more years, that $1 million will turn into $2 million. Because of compound interest’s exponential growth, and because of time (the most important ingredient) her money will actually double in one-third the time.
Researchers have found that the majority of Americans believe that savings grow in a straight line. Only 22 percent understand that the growth is exponential. Blame whomever you want to: our schools, our parents or our culture. But get past the idea that you don’t have enough to put some away. Set a goal and go for it.
Are you truly strapped and unable to squeeze out a thing for saving? A web search returns 324 million hits on how to save money. Here are a few:
• Jean Chatsky, a financial adviser, author and TV personality, says: “Lose what you’re not using. Dump a gym membership if you don’t go often. Start walking with a friend instead. Check your cell phone and other media charges and switch to a less expensive plan. Buy fresh food and cook. Put a 24-hour ‘purchasing pause’ on an item that you think you can’t live without. You may realize that you don’t want it as much tomorrow.”
• MensHealth.com suggests: Set up a Digit app on your phone. Every few days it caches a bit of your money into a separate savings account. The minimum average that Digit accounts set aside is $80 every month.
• The AARP Bulletin urges us to take advantage of money-saving apps, such as GasBuddy, Freecycle.org, paperbackswap.com, swapstyle.com, rehashclothes.com, and on and on.
You can do this. I know it.
Terrie Drake is the author of the book “A Quiet Fortune,” and a retired teacher and librarian. She and her husband have lived in Glenwood Springs since 1974. She is not a financial adviser; consult a competent professional for your personal financial solutions. She can be reached at firstname.lastname@example.org.