Plant Your Tree Today

Take the narrow road- Be wise!
Mike Haswell, founder Storing Treasures

“The wise man saves for the future but the foolish man spends whatever he gets.” Proverbs 21:20

I recently counseled with a couple that recently graduated from college and were getting married. It was a real blessing to be able to talk to a couple that had a blank slate when it came to their finances. We had an opportunity to discuss how decisions they make today will impact, positively or negatively, their impact on themselves and their world tomorrow. One of the main areas in which this is so true is the importance of saving for their future.

According to the Employee Benefit Research Institute, 46% of all Americans have less than $10,000 saved for retirement and 33% of all households end up completely dependent on Social Security.

The good news is we don’t have to become those statistics. Let’s consider three key principles that are taught and how it affects us in our financial planning:

1. Steady plodding. Being diligent with your finances means to allow it to grow over time. A systematic savings plan allows compounding to grow your savings and time is the key ingredient for success. Consider these statistics: Person #1- One 21 year old person invests $1,000 for eight years and stops at the age of 28. The investment: $8,000. Person #2 begins investing at the age of 28 and invests for 37 years until the age of 65. The investment- $37,000. When they both turn 65, who has the most money in the bank? Incredibly, person #1 has $50,000 (assuming an 8% return) more than person #2. Start saving now- it is never too late!

2. Diversification- Ensuring that you do not have all of your eggs in one basket is crucial. First, do not have all of your funds in either short, medium, or long range investments. You should have each of these types of funds in your financial plan. Secondly, do not have much of your assets tied up in your company stock… not only would your investment plan be tied up in one set of investments but a downturn in that sector could cost you your job as well. Finally, get involved in different sectors in the economy to diversity your portfolio.

3. Avoid risky investments- A good financial planner clearly points out the danger of speculation while investing. Marriages and families have been destroyed over the violation of this principle. There are two clear guidelines. First, if you do not understand the investment, do not participate in it. Secondly, if you must do it quickly, run away from it. You can make many more mistakes by acting quickly than as a prudent saver or investor.

Small amounts can grow significantly over time and we can sleep easier at night knowing we are following a basic tenet of good stewardship and preparing for our family’s future!

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