Rich Habits Word of the Day
Endow – Save, contribute. Tom viewed his savings an endowment towards financial independence.
Rich Habits Fact of the Day
What they’re doing: “A million dollars is not the goal,” says Chris Stacey. “For me it’s $2.5 million.” The Honda salesman figures that’s what he and his wife, Amy, a part-time dental hygienist, will need for a comfortable, worry-free retirement.
Chris started saving diligently the moment he sold his first Accord 18 years ago, even going so far as to fund a Roth IRA for Amy before they were married. Over the past five years the couple, parents of a 16-month-old daughter, have been socking away an average of $35,000 a year — or about 23% of their gross income. That savings level is even more impressive given the steep drop in car sales during the Great Recession. (Chris works 100% on commission.)
How do they manage it? By living below the lifestyle they could afford during Chris’s good years. That’s illustrated by the fact that, while Chris gets a loaner car through work, Amy drives a 2004 Pilot with 71,000 miles.
Their philosophy, says Chris: “The more we can save now, the better off we’ll be in 25 years.”
Rich Habits Lesson of the Day
Wealthy, successful people consider savings and investment two opposite things. They believe you should never lose money on your savings, whereas, investments represent a portion of your savings you are willing to put at risk. When you invest, you accept the risk that you could lose some or all of that investment. How much you take out of your savings and invest depends on your risk tolerance. Conservative wealthy people do not put any of their savings at risk. Moderate wealthy people put 25-50%% of their savings at risk. Aggressive wealthy people put 50% or more of their savings at risk.