Saving Your Way To Riches
So I had some time to kill yesterday Tuesday (occupational hazard: stating which day I meant) in the afternoon.
I went to the bookstore and promptly skimmed through/semi-read the book, The Automatic Millionaire.
For those who would like their financial planning reduced to reading a blog entry, you should:
Step 1: Write a book on how just about anyone, even you, can achieve financial independence and live out retirement as a millionaire
Step 2: Sell it along with CDs, companion workbooks, and seminars
Step 3: Sit back and watch the royalties roll in from people who buy your book, CDs, companion workbooks and attend your seminars
- - -
Well actually it was a rather good book. In the sense that it was easy to read and I managed to finish it before my next appointment ($23 saved, baby!). But here's basically what the author is extolling:
Step 1: Pay Yourself First.
Not a new concept; basically, be sure to set aside an amount for your retirement first, ahead of commitments to the bank, splurging on friends etc etc. This would preferably be a percentage of your income, instead of an absolute amount, so you save more when you earn more.
Step 2: Make It Automatic
The author's "big idea". Arrange for the amount determined in Step 1 to be automatically deducted each payday. Very, very few people are disciplined enough to do this manually; having it automated ensures this amount gets saved, and saves you time as well.
(Yeah, you should then invest your savings in a portfolio suited to your risk profile and investment horizon).
Step 3: Buy Your Property
If you are renting, you are making the homeowner rich. You should always aim to own your own home. So each payment builds up your assets column, and not gets erased as an expense year after year (the accountant in me is getting all excited about balance sheets and P&L! Help!).
- - -
So there you have it. 3 simple rules according to the author of that book. By the time you retire, you should have a respectable nest egg (assuming retirement is not 1 year away, of course).
Although I think my own 3 rules would work much faster.
I went to the bookstore and promptly skimmed through/semi-read the book, The Automatic Millionaire.
For those who would like their financial planning reduced to reading a blog entry, you should:
Step 1: Write a book on how just about anyone, even you, can achieve financial independence and live out retirement as a millionaire
Step 2: Sell it along with CDs, companion workbooks, and seminars
Step 3: Sit back and watch the royalties roll in from people who buy your book, CDs, companion workbooks and attend your seminars
- - -
Well actually it was a rather good book. In the sense that it was easy to read and I managed to finish it before my next appointment ($23 saved, baby!). But here's basically what the author is extolling:
Step 1: Pay Yourself First.
Not a new concept; basically, be sure to set aside an amount for your retirement first, ahead of commitments to the bank, splurging on friends etc etc. This would preferably be a percentage of your income, instead of an absolute amount, so you save more when you earn more.
Step 2: Make It Automatic
The author's "big idea". Arrange for the amount determined in Step 1 to be automatically deducted each payday. Very, very few people are disciplined enough to do this manually; having it automated ensures this amount gets saved, and saves you time as well.
(Yeah, you should then invest your savings in a portfolio suited to your risk profile and investment horizon).
Step 3: Buy Your Property
If you are renting, you are making the homeowner rich. You should always aim to own your own home. So each payment builds up your assets column, and not gets erased as an expense year after year (the accountant in me is getting all excited about balance sheets and P&L! Help!).
- - -
So there you have it. 3 simple rules according to the author of that book. By the time you retire, you should have a respectable nest egg (assuming retirement is not 1 year away, of course).
Although I think my own 3 rules would work much faster.
posted by chiakhong at
8:24 PM
0 Comments:
Post a Comment
<< Home