It’s time to take the first step to your financial freedom. The most important financial decision of your life needs to be made right now! It’s time for you to decide to become an investor, not just a consumer. To do this, you simply have to decide what percentage of your income you will set aside for you and your family and no one else.
Save a fixed percentage each pay period, and then invest it intelligently, and over time you’ll start living a life where your money works for you instead of you working for your money. What percentage works for you? Is it 10%? Or 15%? Maybe 20%? There’s no right answer here – only your answer. If you’re looking for guidance on this, experts say you should plan to save at least a minimum of 10% of your income, although in today’s economy many agree 15% is a far better number, especially if you’re over the age of 40. But here’s the key to success: you have to make your savings automatic. The best way to save is when you don’t see the money in the first place.
Theodore Johnson worked hard and moved his way up in United Parcel Service (UPS). He never had more than$14,000 a year, but here’s the magic formula: he set aside 20% of every pay check he received and every Christmas bonus, and put it into company stock. Theodore eventually saw the value of his UPS stock soar to over $70 million by the time he was 90 years old. Pretty incredible? And the most incredible part is that he wasn’t a gifted athlete like Floyd Mayweather or a brilliant director like Francis Ford Copolla – or even a lofty corporate executive. He understood the power of compounding at such an early age that it made a profound impact in his life. At the end of his life, Johnson was able to do some meaningful things with all the money. He donated over $36 million to a variety of educational causes. He also set up a college scholarship fund.
By committing to a simple but steady code of savings, by drawing down on your income each pay period and paying yourself first, there’s a way to tap the power of compound savings and let it take you to unimaginable heights. As said by Amelia Earhart, “The most difficult thing is the decision to act, the rest is merely tenacity.” The foundation for creating wealth, the difference between a wage earner and an investor, and it starts with setting aside a portion of you income that you lock away automatically.
Do it automatically, such as the following:
- If you get a regular payroll, you’ll most likely be able to set up an automated plan with a call to the human resources department, instructing it to send a specific percentage of your pay check directly to your retirement account.
- If you’re self-employed, set up an automatic transfer from your checking account. If you don’t have a retirement account, open up a savings or retirement account with a bank or financial institution.