The Old You Needs The Young You
I was just pondering over how what we do today has such a large effect on what happens to us in the future, and I remembered something.
The year was 1995. I'm a first year teacher. Fresh out of college and eager. There is a life insurance agent who is coming around to every teacher in the building and discussing one on one, the perks of owning life insurance. What he's really doing is selling an whole life annuity product. I listen to the Brotha because he seems like a nice guy. I'm very wet behind the ears when it comes to money, but it's early in my teaching career, and I'm ripe for learning. He sits me down in my classroom after school and shows me something called compound interest and a table that calculates the potential growth of my money, if I decide to start investing in his whole life annuity product. I was blown away, and I purchased the whole life policy with an annuity, which later I traded in. But the seed was firmly planted. Some might say that was the moment that "Smart Money Bro" was born! What he did was introduce me to something I'd never seen before - the growth of money using compound interest! I was hooked. Long story short - I started investing in long term pre-taxed investment vehicles at age 25, and never stopped. That was over 20+ years ago. He was able to show me that the old me, not only needs the young me, but is solely relying on the young me, and that my financial future was 100% reliant upon the steps I took today, in 1995! Fast forwarding to today, I must say - Compound Interest is still a beautiful thing!
Not only did I learn the power of compound interest, but I also learned another important lesson from the life insurance agent. VISION! The ability to look far into my "personal finance future" was incredibly vital and it has stuck with me. The time value of money is an incredibly fascinating thing. The growth of money strives, and sort of breathes, off the incredible value that's associated with simply "time". Having vision and being able to see your money far out in time has a tremendous value for growing your money. You've heard it said that "time is money". Well, that is the truest statement about money that you've ever heard. If you understand how important time is to money, you will ultimately understand the importance of the "vision" that I was introduced to back in 1995.
I learned that I need to be planning for the future, right now. One of the most powerful things to think about is the fact that the future will be here someday with, or without you. And every time the future arrives, either you, or your loved ones, will benefit from your financial foresight. You've got to be visionary with your personal financial decisions. Regardless of your age, begin to seriously think about where you want to be, financially, in the next 20 to 60 years, and longer. Plan for your kids, grandkids, and great grandkids. They will thank you later.
There's an old saying that bears mentioning here. "The best person to take care of a older you, is a young you". You can rely on that nursing home, or some benevolent family member, if you want to, but, as for me, I'd rather take the necessary steps now, for then! This isn't rocket science and it's not terribly complicated.
Here are 4 quick things that we need to do now that will help us prepare for our older selves:
1. Curb your insatiable appetite for the latest bling bling, because it is completely unnecessary and it's wasting your money left and right. Why you need a $30K SUV when there are thousands of wonderful $12K cars, is beyond my comprehension. Do you really need all 3 vacations every year where you drop $1500 on each one? Many of us, especially in the Black community, are compelled to engage in over consumption to a level that is unparalleled in other communities. We earn less money then everyone else, and then we turn around and spend more money on things we don't need, than anyone else. If you know the statistics that says you, as a Black man or Black woman, earn less than your counterparts, although you have the same degree and the same jobs, then it would stand to reason that you then have to learn to live below your means. Oddly enough, alot of us tend to try to live above our means! And our future financial selves suffer greatly because of this.
2. Debt is a killer! Debt is problematic. Yes, I know there is so-called good debt, and bad debt. Now, unless you are living in the debt, or earning serious money from the debt to pay for the debt (i.e. a business, a building used for your business, etc), then you can consider it bad debt. Just remember, If the debt is not earning you any money, its bad! And MOST debt earns you absolutely no money! If you don't have a serious written game plan for quickly eliminating your debt, it will linger forever. I'm a witness. Trust me. I'm going to attack this debt thing in subsequent blogs, but this is eating most of us alive!! Debt is not cute and you didn't outsmart anyone when you got that $500 per month payment for 60 months at 3% interest. That's another 3 volume series that we will have to pick up later.
3. Emergency fund. Got to have it. Having money that is there, just in case you have an emergency, helps relieve stress. Four to six months, or more, is optimum. Every one of us has "rainy days" from a financial perspective, so why not be prepared. You want to talk about a stress reliever - try having 6 months of living expenses put to the side. That alone would do more for most of us than anything you've ever done with money. Some of you reading this right now have a nice car, a nice house, nice clothes, and just came off a nice vacation, but if the washing machine breaks down, you are in trouble! Seriously, that's not even logical.
4. Investments. If you want to benefit from compound interest, you've got to be investing. The stock market is your friend. Pre-taxed, Roths, Mutual Funds, or whatever. If you aren't investing in the stock market, you are destroying your chances to ever see money make money for you! Forget about the mysticism and mystique surrounding the stock market. Pick up a book, read some articles online, and do whatever you need to do to educate yourself. Take a class at your local community college, online, or do a self study. Whatever it takes, learn about it. Money is at the root of 75% of all of your problems, so why not learn as much about it as humanly possible? You've educated yourself enough to know how to get money, why not educate yourself on how to KEEP MORE of it?
5. Last, but certainly not least, is giving. You have to give to get. Giving is a Godly principal, and if you aren't versed with an appetite to give, you will be cursed with a propensity to not get! I could write a 5 volume book series on the importance of giving. I will keep this brief for this post - Giving is Living. The energy you put out into this world has a way of coming back around to you. The rewards and benefits of giving show up in every area of your life as blessings. Include giving in your plans with your money and you will receive a feeling of gratification and joy that's unsurpassed.
The bottom line is this: You are the architect and designer of your future. There is no one in the world that is going to take better care of the old you, then the young you. Right now you have the energy, the health, the intelligence, and the ability to look into your future. There is not a human being on this planet that is more concerned about your future self then you. I would say there is probably not a human being on this planet who is even thinking about your future self! This is where the young you, the you right now today, comes in and starts planning and prepping and setting the table for the older you. Yes your kids, your siblings, and your loved ones will care about you when you get older, but you and I both know they aren't thinking about an old you right now, and they certainly aren't thinking about financially taking care of an old you! That is YOUR responsibility.