A Quiet Fortune: Take it from the people who know
I’m no professional financial adviser, that’s for sure. I’m a retired educator who started reading about personal finance a long time ago. In years of research I saw one recommendation time and again. Financial experts steadily emphasize this idea:
“Live below your means … save … invest.”
If we all followed that advice I would have nothing to write (or worry) about. But red flags keep popping up to indicate that many people are taking chances with their financial futures. I’ve mentioned two problematic statistics in past columns: 75 million workers have less than $1 saved for their retirement, and 47 percent of Americans would view a $400 emergency as a crisis. Numbers like these predict an approaching catastrophe, both personal and national.
Surely we can do better.
I know it’s easy to overlook the value of saving and investing as we go about everyday life. But money can grow exponentially if we do what’s possible today and give it enough time. That fact is particularly important for young people to be aware of. Time is, truly, of the essence.
But don’t just take my word for it. Check out what the real experts, everyday people, tell us. Seventeen years ago Money magazine had interviewed people they called “millionaires in the making,” then revisited five of them this year. They had, indeed, reached millionaire status, even though they live quite normal lives. Here’s a look at the guiding principles they have used, published in the September 2017 issue of Money.
• Use automatic savings (and dollar-cost averaging) to build wealth.
• Frugality and strong savings goals work.
• Defer as much as you can to a 401(k) if your company offers one.
• Inevitably, the market will drop or you might leave your current job. But do not cash in your retirement fund. Keep it, no matter what.
• Resiliency is important. Bad times come, but you can come back.
None of the millionaires in the article proposed high-risk investments or extraordinary measures as the way to wealth. On the contrary, they had all taken the advice to “Live below your means … save… invest.”
But what about the big dogs, those people who have moved far beyond mere millions and into billionaire status? Interestingly, they suggest much the same.
One person featured in the September issue of Money was Spanx founder Sara Blakely, who became “the world’s youngest self-made female billionaire,” according to Forbes. Here are a few of the things she said:
“(1) What I did was start small, think big, and scale back. I didn’t ever get ahead of myself on spending. (2) My main thing is I just spend below my means. (3) We spend a lot of money in our culture on entertainment, but we spend very little money on the inner [strength of our minds. Learn about and invest in] the power of your brain … that’s your greatest asset.”
Mark Cuban, Internet audio and video pioneer and owner of the Dallas Mavericks, stresses these things: (1) Believe in the discipline of saving. (2) Put money into a low-cost mutual fund. (3) If you charge on a credit card, do it only if you can pay it off monthly. Don’t carry a balance because “the 18-30 percent you are paying in credit card debt is going to cost you a lot more than you could ever earn anywhere else.” Finally, (4) “The key is living within your means. Saving money and putting some into a low-cost mutual fund and living as inexpensively as you possibly can will pay off [in] dividends.”
The article is revealing and you might want to look at it. But this is the condensed version of real advice from seven experts, those who don’t have to worry about their financial futures anymore. If you are not among that group right now, I hope you will be someday.
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 email@example.com.