Episode #44 – Be An Early Saver!


[00:00:20] Well, hi everyone, welcome to another wealthy and wise Wednesday, hope your weeks going well for you, hey, you know I have been thinking about a lot of stuffs especially when it comes to saving and retiring. I am sure you have to especially if you are getting in that range where you might be thinking about retirement here shortly, yeah I read a startling statistics the other day that 75% of the Americans nearing retirement age have less than $30,000 in their accounts.

[00:00:57] Now you don’t need to be a mathematician or any kind of financial genius to realize that $30,000 probably isn’t going to last very long in retirement. It went undecided almost half the meal class in America, half the meal class workers out of that you know about 49% will be poor or near poor in retirement, living on the budget of about $5 a day. I mean that is brutal, you work 40, 50 years, I mean the blood, sweat and tears of all those days of labor and most half of American at retirement are going to live poor or near poor and that is just not right and it doesn’t have to be that way. Part of it is the 401k in traditional financial planning really just isn’t working, if it was then wouldn’t more people be retiring with enough wealth to at least last their lifetime. I mean it just seems to me, if this was just a good system, we will have a lot of people way over the wealth standard.

[00:02:16] You know to maintain the standard of living in your old age, in your retirement years, how much do you need to have, what kind of net [00:02:24] do you need to have. There is a good rule of thumb that you need 20 times your annual income. Alright, so pick an easy number, if you are to earn a thousand dollars a year, you are going to need about 2 million dollars beyond what social security is going to play. If you make 75000 a year, you are going to need about a million and a half dollars in a net [00:02:52] tucked away and ready to go to work for you to make sure it last as long as you do.

[00:02:58] well how is your progress, I didn’t mean to make this Wednesday a wealthy and wise depressing Wednesday, you know there is a lot of people struggling with this, trying to figure out they are going to get there and the problem is we need to figure out things that you really can’t figure out like you know do you think you or your spouse would ever be laid off or too sick to work, do you have any idea what day you are going to die. Do you understand this that since the day you started working, you probably should have been put in about 25 years old about 7% of every dollar you earn, you should be putting away and that again is assuming you started at age 25, if you are now 55, you need to be saving 40% of every dollar that you earn just to make sure that you are going to have enough money.

[00:04:04] The other thing is you can’t withdraw or spend any of those funds if you lost your job, had health problem, got divorced, buy a house, send the kids to college, all these potentially made your expenses that we run into in our lifetime. If you touch that nest egg, then you are tapping into retirement again may not turn out very well. So the optimal is to spend the last cent that you have on the day that you die but unfortunately those are just things we don’t know. I remember hearing my dad say something like he wants to have his estate person write the last cheque to the mortuary and then he hopes he bounces. Basically, spend to that last moment and even get short changed and I am like well dad, thank you very much.

[00:05:11] Well, you know the 401K has been around for over 30 years now and it has been kind of a preeminent model for retirement, every financial advisor and CPA’s you know encouraging you to fund this but it is really failed, it has not lived up to its expectations and I think part of it is we rely too heavily on it, we need to take more responsibility about learning about money, investing, and how to control that end of our life. So many people rely on this, you know money managers or professionals if you will, they waste million dollars in fees and if they just took a little time, they can really produce much better results. You know I heard Jack Hanfield on this guy, he is the one who wrote chicken soup for the soul and he really didn’t know more about investing but he knew he needed to learn more about it and one of the first question he asked was you know how much time do you spend the day watching TV?

[00:06:24] Well he said, it kind of hit him hard and he wasn’t sure but the questioner wasn’t going to back down and then you know want to get an answer, so you know let’s go through it Jack, what is going on in your day and after, he thought about the news and this and that, he ended coming up with about 3 hours a day that he spent watching TV, if you calculate that out in a year that is about 1100 hours, okay. If we take a [00:06:55] hours each week, which figure 16 hours each day times 7, we get about 112 weekend hours during the week. So if we look at that over a year time, he was basically spending 10 weeks a year, 24 hours just on TV.

[00:07:18] Now that is a three hour a day, there is another studies out there that shows that people are you know 5, 7, 8 hours a day, which may add up to 15 or 20 weeks a year just watching TV, being entertained. You know you can get a college master degree studying on your own in about a year’s time, if you just took a few minutes out of that TV schedule. Can you imagine the knowledge you would have if you just took 30 minutes, five days a week and cut out just a little bit of TV and you learn more about investing and controlling your financial future and you know what? Let me give you a promise, it is not that hard, in fact, I need to make a list of some really good books that can help you get through this really simply, we will start with my book right?

[00:08:18] Because it is just a very simple process on how to build a system that is going to help build your wealth. You know you can look back on life and you may be able to quote your favorite TV programs, the promise you may be living just on social security and crush your fingers that you are not going to need much more money in retirement or you can take a little bit more of an active role. Again, this isn’t that hard and secure not only your retirement but your future. Become an early saver, you know I remember starting my first saving account and we were pretty much broke when we first got married. Somehow I pulled together 25 bucks a month and then that turned into 50 and then a 100 and 500 and somehow I just continue to grow from there. That is what can happen if you have more of a saving mentality than a spending and certain a debt mentality.

[00:09:26] We talked about that on our last few episodes, especially with what college debt is going to people. That can take you back years and years, so we obviously want to stay out of debts as much as possible. I also promise you that we will do ab episode on the difference between good debt and bad debts, so we have got to get there as well and we are definitely going to get back to talking more about the wealth tree and I think that is an exceptional way to think about money and to build your wealth. So as we go back to that and by the way I think that was episode, might have been episode three or four that if you want to learn more about the wealth tree go back to those episodes and learn more about that because we are going to talk about that in the future, we are going to talk about rude assets and what kind of places we can store money that will be a good safe solid rude asset.

[00:10:23] And then the trunk asset and how the equity and businesses and home and all those kind of things playing to that and then finally our investment or our globe where we may be taking a little bit more risk but we are doing it very predictably and again the more Warren Buffet style. Because I mean come on, he is the greatest investor that has potentially ever lived and we have access to his own mind, we have access to what he did and how he did it and he is willing to share it, it is out there for the taking. Yet, what the financial advisors and you know quote on quote money managers and fee based guys do, they don’t even do anything near what Warren Buffet teaches and one of the main principle he teaches is you have got to have capital when opportunities come along and unfortunate part is wall street, financial advisors, they just want you to stay invested 24/7, 365 and you never had capitals when the opportunities come along because your capitals is going down with the rollercoaster ride just like everybody else is.

[00:11:34] So little things like that where the wealth tree comes into play, where we can store capital and be ready for those opportunities. So anyway, become an early saver, become an educated safer and investor. Again it is not that hard, it is really not that hard and I promise you, we will talk more about some of the books that you could read and more in depth of the strategies that you could implement but take control. You know pull that half hour a day from the TV and listen to a podcast, watch a video, read a book, all those things are going to help you become a more educated and inform investor so that you don’t have to rely on the 401k and wall street and all the things that for 30 plus years just haven’t been working.

[00:12:25] And again, look around, look at your parents, look at your grandparents, that those avenues really build that wealth. Okay, so I knew this was only going to be kind of short and sweet, so that is it for this podcast and video, if you have any questions, always questions@wisemoneytools.com, we will answer them just as quickly as we can, in the meantime, have a great week, pick up something, read something, watch something, get a little more educated and that is about it, talk to you next week.

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