– Retirement Millionaire June 2016
Parents and schools should teach the things we’re discussing this month. But that rarely happens, and it’s shameful considering how central a healthy financial position is to leading a good and stress-free life.
You don’t need to be rich, though. You don’t need to pursue money at all costs. But having financial stability gives you freedom. Reducing stress improves your health. And understanding how to manage your income makes for better relationships with your family and loved ones.
Tenet No. 1: Save Religiously
The first step is to curb your spending. Outside of a few things, spending rarely brings joy. Identify the things you truly enjoy spending money on and forget the rest. … But you don’t have to become a monk. One benefit of wealth is having money to spend on a few things that bring you joy. For me, I don’t hold back when spending on books or travel. It’s different for each person. A good rule of thumb is to choose one or two things you truly enjoy spending money on. Then cut back to just the basics on everything else.
Tenet No. 2: Invest for the Long Term
Why do you need to invest? Because real freedom comes from income. And income comes from invested savings.
The core concept of successful investing is simple: Grow your savings to a point at which the interest from your investments will generate enough income to support your lifestyle without having to work. Eventually you reach a “tipping point” at which your savings will hit a critical mass. This simply means that you don’t have to work anymore – unless you choose to – because the interest and growth being generated by your account give you the income you need for your life. This is the pinnacle we are climbing toward.
Tenet No. 3: Obsess About Risk