Rich by Thirty. Lesley-Anne Scorgie

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СКАЧАТЬ during the last section — or at least wondering why you need to think about retirement when you’re still in your teens or twenties — maybe this section will hit home a little harder. You need to care about your money because, even though you’re young, money still affects you. In fact, money affects everyone.

      What do you want to do with your life? Do you want to be a pilot? A nurse? A musician? You’ll need money to do it. Money is also necessary if you want to go snowboarding, buy a house, travel, or shop.

      It comes down to this: money enables us to have choices. The more we understand about it — how to make it, how to save and invest it, how to spend it wisely — the more freedom we’ll have. Think about how dull your life would be if you didn’t have enough money to go to a movie with a friend. Think about how frustrated you would be if you really wanted to become a doctor, like Maya, but couldn’t afford the tuition fees. The more financial freedom you have, the more freedom you’ll have in all areas of your life, including in your career and personal life. You’ll be free to make the choices that best suit your needs and goals. And isn’t that what everyone wants?

      The $5,000 Question

      If you came home and found a cheque for $5,000 in your mailbox, what would you do with it? Would you save the money or buy a car, some clothes, or a hot new sound system? Would you give some to charity, pay off a loan, or take your friends out for a fabulous dinner? Would you start a business? It’s nice to have so many options, isn’t it?

      Now consider the opposite situation. Your most recent shopping trip got a little out of hand and you’re looking at a $5,000 credit card bill! What are your options now? You either pay it back or the bank will repossess your car! Remember, money leads to choices, and choices lead to freedom.

      Now Matters

      Tony is 29 years old and was shifting nervously in a chair across from the loan officer at his local bank. He held his breath as the bank issued its verdict: yes. Based on the strength of his business plan and good credit history, they had agreed to give him a small loan to cover the costs for some electricians’ equipment. Now his plans to start his own residential electrician company would come true!

      What you choose to do with your money today matters because it can impact your decisions in the future. In Tony’s case, if he hadn’t been responsible with his money in prior years, his credit score would have been weak and he wouldn’t have qualified for his small business loan.

      The Not-So-Boring Truth about Time

      I know, I know. All this stuff about retirement and choices and freedom makes perfect sense to you, but still.… You’re probably scratching your head right now, trying to figure out how you — an average person under 30 with hardly any disposable income (the income you have left over after your bills are paid) — are supposed to take control of your financial life when some 50- and 60-year-olds haven’t gotten the hang of it yet. They have good jobs, and houses, and lots of other stuff that you don’t, right? That’s true. But you’ve got one thing that they don’t have, and it may be the most important thing of all: time.

      Time is a pretty handy thing to have on your side. With time, you can grow your money substantially without doing nearly as much work as you might expect. You can do this through the power of compounded interest and reinvested returns.

      Imagine yourself at the top of a hill, making a snowball. It’s a nice, round snowball that takes you all of 30 seconds to make. When you aren’t looking, the wind blows the snowball down the hill. As it’s rolling, it picks up more and more snow until, a couple of minutes later and with no additional help from you, a giant snowball stops at the bottom of the hill. That’s how compounded interest and reinvested returns works. You earn interest on your initial investment, which is then reinvested, allowing you to earn interest on that as well. So now you’re earning interest on the interest on your original investment. As time passes, your money grows, like the rolling snowball, into something quite impressive.

      The table below is an abbreviated version of one you’ll see later, in chapter 7. For now, all you need to know is that if you start early enough and contribute to an investment plan regularly, you can turn yourself into a self-made millionaire. In this example, a young person starts saving $100 per month until the age of 65 and retires a millionaire! (This example assumes a 9 percent annualized rate of return and rounds to the nearest $100.)

Compound Interest
Age	Saved per month ($)	Total saved ($)*
15	100	1,300
25	100	23,000
35	100	74,200
45	100	195,600
55	100	483,000
65	100	1,163,400
*With compounded interest and reinvested returns.

      Impressive, isn’t it? With only $100 per month you can become a millionaire! Wondering where the heck you’ll find $100 per month to contribute to an investment account? Read on! Rich by Thirty will show you how to live frugally without foregoing fun, and how to make more dough so you can afford your savings contributions.

      Now, think about how much more money you would have if you increased your monthly contributions as you advance in your life and career — you’d achieve millionaire status much faster!

      If the table isn’t enough to inspire you, think about it this way: you can actually double, triple, and quadruple your money with the power of compounded interest and reinvested returns. I’d like to introduce you to what investment types call the Rule of 72. Basically, it helps you figure out how long, based on a fixed interest rate, it will take for your money to double.

      This is how it the formula works:

      Time it will take for your money to double = 72 / rate of return

      So, if you keep your money in a growth-oriented portfolio (more on that in chapter 8) that is averaging a 12 percent rate of return, it will take six years for your money to double (72 / 12 = 6). On the other hand, if your ordinary savings account is earning 2 percent, you’re looking at 36 years to double your money! See what a difference your rate of return can make?

      Making It Personal

      I’m hoping that by now you’ve developed a greater appreciation of what money can do for you — how you can make it work to your advantage, how it can change your life for the better. I’m also hoping that you’re sufficiently motivated to dive in and get started. It’s never too early (or too late) to take control of your financial future.

      Goals Lead and Dreams Follow

      Do you have dreams and goals? Of course you do. Have you ever wanted something so badly that you simply had to find a way to get it? Throughout my university years, I dreamed about having my own place when I graduated. For four years I saved a little money each month so that I’d have enough for a small down payment on a townhome upon graduation. My goal of owning a place led me to take actions that would make it happen. Now my dream of owning a home has come true.

      Goals → Actions → Dreams

      Goals don’t have to be huge to be real. Your goal could be to buy a bike next year. Or you may want to complete your full education with no student debt. Perhaps you want to save enough money to start up your own tech company. To set goals, you must look into your future and figure out where you want to go and what you want to do and have.

      This goal business can be tricky. Some goals, like saving for a computer or a car, make perfect sense. Others, like winning the lottery and retiring to Hawaii, may not be so practical. When you set your goals, there are a few things you can do to make sure they have a real chance of happening.

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