Financial Retirement Planning

I am taking a really awesome class online through USU called Family Finance. I am loving this class because I am learning so much about a topic that has interested me for a long time. I was always the penny pincher in my family. I was the only one out of all the kids that never bought a car when I was in high school. My mom always knew that I was the one that wouldn't go out and foolishly spend my money, but save it for things more important.

In my reading for this class, I have discovered so many things that you must do at a young age to save up money for the future. The biggest thing I read about was RETIREMENT. I know at such as young age as 21 that a retirement 44 years in the future is not something that matters to me now. However, that is 44 years of saving and interest that could be accumulated. Time is such an important factor. A person who began saving for their retirement at the age of 23 saved and earned almost twice as much as someone who began saving only 10 years later at the age of 33. The power of compound interest is astounding.

In my other book, "The Automatic Millionaire" by David Bach, I read about a couple named Jim and Sue McIntyre who became "automatic millionaires" by following just a few simple rules. When I read these rules, I was happy to find they were already my rules and goals for the future.

First, they had no debt. With the exception of buying a house (and I say education because the church says it is ok), they saved up their cash and paid for everything in full.

Second, they paid themselves before they paid their bills (and of course we will want to pay tithing before we do any sort of other paying at all). They set up an automatic payment to pull up to 15% (you don't have to start this high! They only started out at 4%) out of each paycheck to go into savings/retirement. 15% really adds up over the years.

Third, they cut back on unnecessary spending. They explained that they used to smoke, but after calculating how much money they wasted on cigarettes, they figured they could do without and ended up saving all that extra money that would have been spent buying cigarettes.

Fourth, they increased their mortgage payments. They explained something about splitting their mortgage payments in half and paying twice a month, they were able to end up making an extra payment each year. They also decided to add a little extra to each payment and ended up having their house paid off in less than 23 years. Most mortgages go for 30 years. Because they paid off their house so quickly, they saved up and bought another house and used their first one as a rental to bring in extra income.

Fifth, they bought used. They saved up and bought used cars (that were always inspected by a mechanic to ensure it was running well and took good care of it), and they even bought a used boat.

By the time Jim was able to retire at age 55, they had no debt and have saved up toward $2 million dollars.

So what is my moral of the story? "By small and simple things are great things brought to pass." A little saved here and a little saved there can accumulate to be something great in the end when you are ready to stop working and retire.

Take a part in your work's 401(k) plan if you can. You will gain so much by taking advantage of the benefits your work has to offer you. And don't be worried that you don't have it yet. We are all still so young and still working our way through college. We will always be working various jobs until we can land ourselves in a career with a company that we like. Be patient, but be diligent. I know we will be blessed for it.