Wake Up Call
There are times when statistics can be startling and bring clarity to an underlying problem. Recently, a U.S. Federal Reserve study revealed that half of Americans spend more than they earn, 25% cannot pay all of their regular bills each month, and half of Americans cannot come up with $400 in cash to cover an emergency. Ironically, these statistics come from the federal government made up of leaders in Congress who don’t seem to be able to balance a budget or pay our commitments within the revenue they bring in.
Living on less than you earn is the most fundamental foundation of building wealth. There are only three things we can do with our money. We can spend it for the needs and wants we have today; we can save and invest it for our future; we can give it away to charities and causes that matter to us. A portion of every dollar should go into each of these three categories, but if you spend more than you earn, you have nothing left to invest for your future or give away to those less fortunate.
As a society, we are the richest people who have ever lived, but even so, we have increased our capacity for spending beyond our income. Our parents and grandparents had fixed retirement plans and pensions that would take care of them in their later years. Today, with our tax-advantaged retirement options, we can live far better in our golden years than our parents did if we take advantage of the IRAs, 401ks, and other financial opportunities. But if we spend all our money now, we have nothing to invest for our future, and the days of a retirement safety net in the form of a pension are long gone.
The fastest-growing group of millionaires in America is made up of the new 401k millionaires. Teachers who invest in their 403b retirement plans rank third among professions of new millionaires—right behind engineers and accountants. There’s no reason we can’t live well now, have a bright retirement future, and give money away to help our less fortunate neighbors making the world a better place to live. It happens one dollar at a time and one spending decision at a time.
Benjamin Franklin may have said it best, “A penny saved is a penny earned.”
As you go through your day today, spend wisely, invest for your future, and give generously.
Today’s the day!