Hey imagine you received a windfall of lifetime earnings at once? Would you treat this windfall differently? Do you know how much income, side hustle, illegal activity you’ve made in your lifetime? If you already have 5 years of working history under your belt after college, and made on average at least 50K-55K annually how much is that amount. For those of you who are not too good at math it is 250-275K thousand dollars. Now back to the first question asked, imagine you received all of that money at once?
I know the first thing many would do if they received all those greenbacks at once. Shall we say brand new fancy shmancy car for the average person. But guess what we savvy financial folks are not average; we are super frugal smart financial machines. I know this might seem like a big windfall, but to put in perspective, IT is a freaking Huge Windfall.
If you can start off your financial life with this much in savings ear marked for retirement, do you know what that amount will look like in 30 years. A boat load of dollars is what that looks like. So please do not undermine the power of compound interest, dividends, capital gains, or any gains for a matter of fact.
Let’s assume that we will never get that windfall and just save big bite sized chunks of money every year to reach a sizeable nest egg as quickly as possible. Who the heck wants to play catch up? Not me and certainly not you.
How can you get your own windfall started a.s.a.p.? Well you might want to increase your 401K and Roth IRA contributions beginning as early as possible in the New Year or even Tomorrow.
You can also pay yourself second, because the 401K is already 1st in my book, by redirecting a set amount to a brokerage/ savings account.
Third and lastly you can slowly decrease all unnecessary expenditures to help you increase your savings rate going forward. Who wants to stay saving 10% of income forever? By cutting back you can ramp things up dramatically and be free sooner than age 65.
Can you possibly save a bigger percentage at once or is it easier to save $$ by applying these tactics above? I know what you’re thinking the spending possibilities are endless as the Ferrari you always wanted is burning a hole in your 250K pocket. Which is the very next thing you must buy, as it will help transform you into that guy in Brewster’s Millions? Richard Pryor’s character who spent 30 million in 30 days. (Say What) Great movie to show the unfulfilling consumerist abundance some people have accumulated in order to display “wealth” to others.
Now that I have this idea in my head I feel a need to whip out the calculator and divulge my lifetime W2 earnings. How sad would it be if you earned a million dollars in your working life, and you have a negative net worth today?
That just puts things in a new light to question, where the HECK are your Marbles?
Yes during that time frame you lived life, and all of that comes at a cost. Yes I agree but if you previously saved a minimum of 5% consistently; a million dollars earned X 5% you should have 50K in retirement accounts. Hopefully you do to help you compound right now & later on in life.
The point is to get you to look at the big picture of how much earnings can be saved year after year. Granted if you saved 20%, but the market jumps another 30%. You still saved only twenty, but the investment returns makes it feel like you saved more. At the end of the day any savings is a positive financial move you must take.
What’s your windfall of lifetime earnings? How much do you have saved?
Rich Uncle EL
