A Quiet Fortune column — The news: bad, better and great | PostIndependent.com

A Quiet Fortune column — The news: bad, better and great

Terrie Drake
A Quiet Fortune

How do you turn bad news great? You let it inspire you to take action. Step one: Read on.

The bad news:

• 26 percent of Americans have absolutely no savings set aside for emergencies.

• 36 percent have saved nothing for retirement.

The better news:

Let's say you put $1,000 into an investment and add $50 each month. It grows at 8 percent during your career of 30 years. You will have invested $19,000. The total you will get back is $85,450. You will have made $66,450 without doing another thing.

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The great news:

Starting today to put some money aside will help you get way ahead. You can be on the path to financial security within just a few weeks.

The bad news:

The amount I mentioned is far below what we'll need when we get older.

The better news:

If you improve just one thing from our example, what you'll make can grow exponentially. For example: Save the same amount, but for five extra years. You will have contributed just $3,000 more, but you'll end up with almost $131,000 instead of $85,000.

The great news:

It's absolutely possible to save more or for longer if we understand the enormous difference our small habits can make. Foregoing a purchase today for wealth tomorrow will give us control over our money worries. We'll feel powerful over our finances. (And we'll be able to let go of that "Keeping up with the Joneses" mentality that's so easy to fall into.)

The bad news:

About 38 million American households live paycheck to paycheck. We should save 10-15 percent of our income, but the nation's personal savings average has declined to less than 4.4 percent. At times that average has been as low as negative 2 percent. Many of us are spending more than we make, and some of that spending is on stuff we want only for a little while.

The better news:

During the recent recession that began in 2008 the average personal savings rate was 10.5 percent. People saved more than twice as much as they do today even though incomes were lower. It's both possible and essential for most of us to increase what we save and invest.

The great news:

We don't need to panic; we just need to decide to treat ourselves well by starting a "quiet fortune fund," putting something aside automatically with each paycheck. People want to do that when they realize how significant the returns can be.

That's probably enough of the "bad news/good news" for now. But facts and stats like these are important, especially the statistics about how our actions today can make a difference to us in the future. Some schools are beginning to teach students how to get along in a financial world. But decades of students have graduated with almost no guidance at all about money and how to handle it.

Real possibilities exist for all of us, and today there are many resources we can use to learn some of this stuff. I recently ran across a little e-book called "100 Things You Absolutely Need to Know About Money Before You're 35," by Kelly Phillips Erb. It's quick and simple, and divided into categories that let you read only what you're interested in. I found it on Forbes.com.

Plenty of other resources exist. You can figure out how much an investment will increase if you invest different sums for different amounts of time. Use http://www.investor.gov or http://www.bankrate.com, for example. Or Google "investment calculators" and start playing around; you might be amazed at the potential. Another great website is http://www.feedthepig.org. It's filled with hints and info most of us could use.

One last thing you might look into: Is there any chance your grandpa stuck about $1,000 in the S&P 500, say, 70 years ago? Maybe you've inherited it? If so, you're probably now a millionaire, and you might want to give us all some good advice. Email me with your own "great news" story.

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 draketerrie@gmail.com.