One of my best friends owns a gift store in Pennsylvania. He is a very successful businessman who, along with his wife, has built two profitable retail outlets from the ground up.
His current venture has less than 1,500 square feet of selling space, yet my friend has been able to send his children to expensive private schools, save at least fifteen percent of his income and pays off his credit card bills every month.
If you walked past my friend on the street, you wouldn’t think he ‘looked wealthy’, yet he has a net worth of a million dollars.
How did he achieve financial freedom at the ripe old age of fifty?
He didn’t inherit it. And he doesn’t wear his wealth on his wrist or park it in his garage.
Instead, he and his wife were fanatics about saving, and built their seven figure personal finance balance sheet with shrewd investments.
My friend realized from a very young age that the real price of an item isn’t just the out-of-pocket cost. It is the forgone wealth that money compounded over time can earn you.
Noted business author Michael LeBoeuf offers up five reasons why saving is your key to financial freedom. The following examples are based on an index fund investment averaging an 11 percent annual return:
1. By saving $5,000 instead of spending it on a fancy wristwatch at age twenty-seven, you would have $263,781 by age sixty-five.
2. By saving a dollar a day at age eighteen instead of spending it on lottery tickets, you would have $579,945 by the time you reached retirement age.
3. By avoiding credit card interest charges from adulthood to retirement age, you would save $1,606,404 (based on $1,440 annual interest charged on an average credit card balance of $8,000).
4. By saving $5 a day instead of spending it on junk food, cigarettes or booze from age twenty-one to age sixty-five, you would have an additional $2,080,121.
5. By purchasing instead of renting a home at an average of $1000 a month, you would save $13,386,696 from age twenty-one to age sixty-five.
Achieving financial freedom doesn’t have to be difficult. It does, however, require commitment to a personal finance goal.
Own the power of your personal finances and retire a millionaire!
Marc Woolf
Blog Posts Copyright © Marc S. Woolf 2007 All rights reserved.
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