Photo by Moyan Brenn
As we move from the sleepy hollow of winter and feel the hint of warm breezes, many will be embarking on a new life as the education year is winding down. Many years of learning will be under your belt, and if you’ve planned wisely, a career that fires your passion is about to begin.
Your future holds promises of dreams and goals that will bring excitement and adventure as you strike the course of your career. However, the path you set now may not be the same path you want to continue on as you grow and mature.
Very few of us can predict when that path is about to change. This is exciting in some respects but can also be very devastating. If there is no foundation built along the way to provide a safety net, those once-in-a-lifetime opportunities may slip from our grasp.
Plan your life around your savings
The premise of that foundation is savings. A good plan of action when you embark on your career is planning your life around your savings rather than planning your savings around your life.
Once this becomes a routine, you won’t be enticed to spend beyond your means. A solid foundation takes time to build so use the time you have now to grow your wealth. Wealth doesn’t come from your earning potential, it comes from your savings potential – it’s all about how much you keep not how much you make.
Avoid this scenario of disaster: You’re young and you think that you have lots of time to save later. Now you want to move to take advantage of a new job, or travel, buy a car, a condo, and all that comes with owning a home. You have no savings so you incur the debt to fund these experiences, some at high interest and long amortizations.
Your new life now blossoms and you have a family, a bigger house, and children to raise. A larger mortgage, more credit card debt – but that’s OK because you still say you’ll have time to save later.
Take a page from the book of those who have gone before you. Nothing will be different; you’re now in the last season of your working career, and wanting to slow down and have more free time, but unfortunately you will only have saved a meagre amount. Now what? You have very little choices and not much control over your future. Doesn’t sound very appealing, does it?
Rewind and do over. You’ve made saving a priority first by keeping the end in mind: retirement. You’ve made a commitment that each month before any discretionary spending happens, a specified amount will go into a savings vehicle that over time will grow. These savings may have a number of purposes over the years, but will always include a base amount set aside for retirement.
In addition, since you are not living beyond your means, you have no credit card or consumer debt. Those large purchases such as a house will have a mortgage that is manageable because there was sufficient savings for a down payment.
Imagine the amount of interest paid over a lifetime of debt which would now be growing in your savings. That can amount to thousands of dollars.
Now, in your last season of working, you have a pool of money that gives you choices. You may choose to continue working, move to a warmer climate, or spend more time with family and friends. At the end of the day, the choice is yours.
You will have control over the quality of your life which is truly the meaning of wealth.
Janice Desautels has been working with families and individuals for the last seven years helping educate in the field of financial literacy. She is a Certified Financial Educator with over 15 years’ experience in teaching and training adults. For questions or advice, please contact firstname.lastname@example.org.