That’s what I told our oldest son the other day. He’s just starting high school, and my wife and I are determined that he’s going to have the best possible education to help him through life. For us, that doesn’t mean an exclusive school, although he happens to be attending a really good public school.
No, it means giving him the knowledge that schools don’t generally teach, but that will prepare him to be successful financially and in life as whole.
Most people don’t realize this, but being financially successful isn’t luck or something that only super geniuses can aspire to. It’s a learned skill. The tragedy is that the knowledge to develop that skill isn’t taught in our schools, particularly in high school where our kids can get the most leverage out of it. It’s also one of the things I address first in my book on my success as an author, because it’s something almost everyone overlooks.
In this case, what I was talking to our son about was a book called The Automatic Millionaire by David Bach. This book is one of the ones that I have on our “fundamental to success reading list” that our boys are going to have to read a bit each day before they can watch Spongebob Squarepants on the boob tube.
I can see the skepticism in your eyes (yes, I’m watching you right now through your web cam!), but The Automatic Millionaire is NOT about any get-rich quick scheme. In fact, it’s the very opposite. It’s a very down to earth approach to financial success that emphasizes a few fundamentals: pay yourself first, start saving early, pay cash for everything you possibly can (even if you have to save up for a while), and that the “little stuff” you spend money on every day is a lost fortune over time.
“Oh, come on, really?” You roll your eyes.
Yeah, really. Get this: if you’re like a lot of people, you probably spend $5 to $10 (or more) a day on coffee, junk food, etc. If you invested $5 a day, or about $150 a month, at 10% interest, you’d have around $950,000 in forty years. Okay, sure, you might not be able to get an average of 10%, but the point remains: that Starbucks you chug down every morning is literally costing you a fortune (and no, I’m not trying to pick on Starbucks, even though I don’t really like their coffee).
It’s the miracle of compound interest and letting your money work for you over time.
That got my son’s attention. He can relate to five bucks a day. He doesn’t make that much from his allowance, of course (I’m a cheapo and only give him $5 a week unless he earns more by doing other stuff), but it’s an amount he can see in his head. And he could *definitely* relate to that amounting to almost a cool million over time.
Another chart in the book grabbed him even more. Starting at age 15, which is what he is now, if he was able to save $3,000 a year for five years and never put in another dime, at 10% interest that would be $1.6 million in 40 years. Again, even at a lower interest rate, it’s still going to be a fortune.
Right now, that $3,000 a year is a steep figure for him to get his head around. But this summer he’ll be working, and he’s now planning on saving a good chunk of that. And he wants to to start putting at least five bucks of his allowance away every month right now. Smart boy.
And what would happen if he saved $3,000 a year every year for the next 40 years? It’s sort of mind-boggling.
Anyway, those are the sorts of “common sense” principles that are in The Automatic Millionaire. A lot of what Bach says is “Well, duh!” sort of stuff, but how many of us actually follow those simple principles? How much money do we throw away every day without even realizing it, money that could be building our fortunes right now?
So, there’s my gift to you today. Check out The Automatic Millionaire by David Bach and start building your own success. Even if high school is a rapidly fading memory, it’s never too late to start. And do your kids the biggest favor ever, by passing on that knowledge to them and getting them started early on the road to success.