"Our prosperity as a nation depends upon the personal financial prosperity of each of us as individuals."
We, as individuals, are failing our country. American families are swimming in personal debt. Our savings levels have decreased year after year (until the Great Recession where they trended up for a short while, and are apparently already trending back down again as we leave the Recession). If our well being as a nation is dependent upon us individually, then I'd like to make a plea to all individuals: Help save our nation by becoming wealthy! My idea of "wealthy" is relative here. For some people, just getting their personal financial state to being debt free with nothing yet invested would be great improvement. For others, to go from consistently spending 100% of their monthly earnings to saving/investing 10% each month would be an enormous gain. For others, perhaps learning more about how to invest, safely, to build what they do have. Here are some practical and achievable steps to improve your personal financial situation:
1. Get out of debt
As of late people in America have been fooled into thinking that debt is ok, and some even think it's good. This is a bad thing for us individually as well as for our country. Right now our economy is far too dependent upon "consumer spending". What this means is that unless people keep spending within our country, our economy could slow. The reason this is bad is because we as a country need to sell more to people outside our country so that we're not just dependent upon using each other's money to keep things going. The reason for this is because every year we have a trade deficit, more money goes out than comes in. It's only a matter of time before far too much money is gone out of our country. Right now this is being subsidized by our borrowing habits. We just keep borrowing more and more money so it FEELS like it's not bad, because there's still plenty of money to go around. This cannot continue forever. And the answer to this problem is innovation. We need to create more products and services that can be sold outside the US. This will only happen when Americans feel the pain of stopping the House of Cards economy by starting to save aggressively- and then out of necessity will come innovation. Americans will never just go without. We've always been hard working and innovative. But with this idiotic mentality that borrowing money is a good thing has come some laziness (why go through the pain and hard work of innovating when you can just borrow more money?). We need to get back to innovation and hard work.
2. Save 10% of all your earnings
Once you're out of debt. Decide that never again will you ever spend 100% of your earnings. This sounds simple, but it requires serious determination by those who have not developed the habit. Because our desires will always out pace our earnings, it will be hard to learn the habit of not spending all of what you make. This leads me to
3. Create and Use a Monthly Budget
This is critical for all families. No matter how much or how little you make, it is necessary to budget how much money will be allocated to different areas of life each month. I believe almost nobody will save 10% of their earnings unless they utilize a budget that is frequently revisited (monthly at least). If you don't like the word "budget", use "monthly cash flow plan".
4. Once out of Debt, Invest
Once you're no longer in debt and you've saved enough for an emergency fund (should be 3-6 months of your monthly earnings), then start investing your money. In The Richest Man of Babylon, George Clason refers to invested money (gold pieces in Babylon) as "golden slaves, each laboring and earning more gold". Have your money produce more money by taking advantage of investing opportunities.
5. Build Enough for Retirement
Everyone is different in what they're looking for in retirement. Some want to retire with more money than they had in their working years, others are willing to live more modestly. Either way, it's far more prudent to ensure your social security in old age than to be dependent upon a government that is apparently in a state of drunken love with deficits and borrowing, with little care for the future other than individual re-elections. Be sure you'll have enough. I personally know too many elderly people right now who are desperate because they have no money and social security is nowhere enough to support them. It is one of the saddest things I've witnessed in my life. Secure your own future. Invest aggressively and say no to the daily temptations we're all faced with. Those things that you purchase today will quickly fade. Your savings and investments will reward you far longer and they will also multiply.
6. Give Aggressively
I believe that those who give more liberally now will also receive more now. I've worked hard to give as much as I can while still preparing, saving, and investing for the future. God has blessed me greatly along the way. I strongly advocate giving 10-15% of what is earned back to those around us who are in need. I also believe that by doing better financially that I will have far more to give in my older years. So give aggressively both now and when you do achieve greater financial freedom. God will reward you in ways unexpected.
