By LORAL LANGEMEIER (Via Live Out Loud)— Did any of those who conditioned your mind teach you the very basics of personal finance? Did they teach you how to balance your checkbook…the proper use of credit and credit cards…basic use of cash management…how to budge and pay your bills…much less even think about teaching you how to invest or put money away so that it compounds for you? If you can answer yes to even one of these questions, you’re in the minority…
The following excerpt perfectly describes the conditioning that most of us were and are still subject to.
“Money comes and goes in your life at different times. Mostly goes, when you’re young. Those are the spent years. Maybe the misspent years. But never mind. As you grow older, the urge to save creeps up on you. Here’s the typical cycle of wealth:
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AGES 20 TO 30
You establish credit, buy your first furniture and appliances, take your first auto loan, learn about insurance and taxes. Maybe (here I’m dreaming (you save a little money, in the bank or in company retirement accounts. Retirement accounts are money machines for young people because you have too many years to let them grow untaxed. By the end of the first decade, you get married, have a baby, buy a house. (You save the old fashioned way – by borrowing some of the down-payment from your parents.)
AGES 31 TO 45
You don’t know where your money goes. Bills, bills, bills. College is a freight train headed your way. Maybe (here I’m dreaming again) you start a tuition saving account. Money still dribbles into retirement savings, but only if your company does it for you – buy taking it out of your paycheck before you get to spend it. When you’re pressed, you open a home-equity line and borrow money against your home. This is a good time to start a business or get more education. Invest in yourself and home for a payoff.
AGES 46 TO 55
You do know where your money goes: to good old State U. At the same time, you get the creepy feeling that maybe you won’t live forever. You thrash around. You buy books about financial planning. You have an affair. When all else fails, you start to save.
AGES 56 TO 65
These are the fat years. You’re at the top of your earning power, the kids are gone, the dogs are dead. Twenty percent of your salary can be stocked away – which is lucky because you will need extra money for your children’s down-payments (kids never really go away). Consider long-term care insurance.
AGES 66 TO 75
How golden are these years? As rich as your pension, Social Security, and the income from the money you saved. Start out by living on the first two. Let the income from savings and investments compound for a while, to build a fund for later life.
AGES 76 & UP
Quit saving. Spend, spend, spend! Forget leaving money for your kids-they should have put away more for themselves. Dip into principal and live as comfortably as you deserve. This is what all the years of saving were for.”
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