Disclaimer: Good Day, Readers. WealthBuildingPowers blog is a financial literacy/competency blog and does not provide specific investment recommendations.
Their Million-Dollar Savings Blueprints
I asked friends who are great savers to share their tips for saving. The parents in this group shared their advice and lessons learned with their kids. Hopefully, you find strategies that resonate.
Saver 1: The youngest contributor is 30 and well on her way to that first million.
My parents ensured I could pursue my dreams without the burden of college loans hanging over my head. Witnessing the struggles many of my friends face today has impacted my perspective on the importance of saving. I am determined to provide my future children with the same financial stability and opportunities my parents gave me.
Today, I prioritize financial planning by maintaining checking and savings accounts, contributing to a 401(k), and managing a ROTH IRA. As part of my long-term investment strategy, I ventured into the stock market, primarily through ETFs such as the S&P 500 ETF.
I believe in balancing financial discipline and enjoying the fruits of my labor. To keep myself motivated, I’ve set a target to save an additional X dollar, and when I reach this goal, I reward myself with a desired item. This approach reinforces good saving habits and allows me to indulge in occasional treats without compromising my financial goals.
SAVER 2:
It’s hard for people who aren’t natural savers or have not been exposed to savings as a personal behavior or resource. I have to “ghost “ my savings accounts. I seldom check accounts or think about them. Automatic funding is critical. I swear I forgot about my 401k for years, and the IRA was only thought about annually when I made the deposit. To this day, I never know how much is in those accounts or if they are losing or gaining in the market. I am an inactive saver and investor. It is unsuitable for growing the accounts but also avoids unnecessary spending.
SAVER 3:
I pay my credit cards off at the end of every month. I have always done that and will always do so.
My parents told me I had better save my money because they would not buy me a car when I got old enough to drive. They would let me drive one of their cars, but I would have to earn my own. That motivated me. I also knew that I did not want to be dependent on a man for my income, as I saw a neighbor lady go through a horrible divorce and decided I would NEVER put myself in that situation.
So, when I started babysitting for neighbors at 12 years of age, I already had a little savings account, and well, I just started dribbling $ in. When I turned 16, I worked at the local Walmart for $1.65/hour and saved as much as possible. I worked through my junior and senior years of high school, and during the summer of my senior year, I worked full-time. I did not work during my college term but was lucky to have full-time summer jobs every summer. I found them all by Thanksgiving the year before. Living in the Chicago area allowed me to find a job quickly. I did get a chance to work during my senior year, 10 hours per week at $10/hour for the women in the engineering office, calling incoming parents and freshmen women engineering students and offering to answer their questions! That was a fun job and was easy money. $100. Per week was a tidy sum for sitting on my ass and talking on the phone! After my senior year in high school, I was a receptionist and opened accounts at a local bank. After my Freshman year, I worked at Rush-Presbyterian St. Lukes Medical Center near Downtown Chicago in their Bio-mathematical Research Lab. After my Sophomore year, I worked for UOP in Des Plaines, IL, studying heat exchanger fouling. After my junior year, I worked for Amoco in their engineering design for refining upgrades, and then after my senior year, I worked for DuPont.
I was finally able to buy my car at age 21, spending $5K cash from that savings account. This picture was taken the summer I moved to Delaware, in 1978.
The following are a few pictures of my summer jobs: UOP, Amoco, and DuPont East Chicago, in that order. The last picture is the DuPont East Chicago Fosters Lager Memorial Cup Softball Team, where I played the position of “short fielder.” I was the first woman engineer in that plant.
SAVER 4
This is a hard one. It’s like asking, “Do you have any tips or motivations for breathing?” It just makes sense. Discipline and deferred gratification now buy security later in life.
If I have a $10,000 emergency, we can write a check to handle it because I spent less and saved. Because I made do with “good enough” and didn’t let myself be manipulated into buying the newest, shiniest thing or being told I must wear a particular thing or look a certain way. I simply saw to my needs, spent more for fun, let the world’s foolishness pass me by, and banked the rest.
I don’t come from a wealthy family. My family never had enough money. It was one crisis to another. My parents were not good with money. I had to dig myself out of a mountain of debt. Twice. Because that’s what it took for me to learn my lesson. But here I sit, on a tidy safety net born of discipline and self-control. It takes time and commitment, but anybody can get here. There is no magic formula. There is no magic system. You don’t need to buy books and videos from “experts” trying to sell you something (save that money!!). You just need to discipline yourself.
We’ve done okay, even without maxing contributions. (My wife, who earns far more than I do, has maxed. I haven’t, but I have a sweet deal where my employer put an average of 17% of my income into retirement accounts out of their money, not mine, so…
I budget, but I find weekly maintenance is adequate.
We have two credit cards, but we only use one regularly and pay it off every month. No store cards! Unless it’s a “same as cash” deferred interest payment plan. BUT PAY ON TIME OR EARLY, OR YOU WILL GET A HUGE INTEREST CHARGE.
Am I the only one horrified about newer banks advertising the ability to overdraft one’s account by up to $200/month for no fees? Talk about driving kids (because these are marketed to 20-somethings just from the ads’ actors) in the wrong direction!
Oh, I am adding a tip. I’ve seen ads for an Experian app that will help you manage your credit and look for subscriptions you might be paying for but not using. People who are struggling and young people should get this app.
SAVER 5:
- Maximize 401K, IRA, SEP, Roth IRA each month – start early, even if small
- Establish a budget in Excel and track it religiously daily
- Limit the number of credit cards to 2 or 3 and pay off each month
- Pay close attention to what you are spending money on
- Ask yourself, do I NEED this or do I WANT this…Look for sales
- Establish a 3-to-6-month money reserve for emergencies ONLY
- Budget-Budget-Budget
- Parents need to teach their children, to budget and learn the value of money.
SAVER 6
I got into credit card debt early and had to work to dig out. I adopted the 10, 10, 80 rule: Give ten percent to help others; save ten percent and live off 80%. I eventually moved the savings closer to 20%. You must contribute enough to your 401K to earn all matching dollars.
SAVER 7:
My Dad was an electrician, and my Mom stayed at home. They retired at 55, and the secret- ZERO Debt. That became my goal, allowing me to retire at 57—we have zero debt. We contributed to our 401K plans, and we retired comfortably.
SAVER 8:
It was started as a child with a small bank savings account. I learned that I enjoyed seeing my account grow and saw the power of compounding. I set goals for the future. I established rainy-day emergency savings. I never touched my primary savings. I earned a medium-sized pension, which helped. Most companies have eliminated pensions. I grew my contributions to the 401K to the max amount. I always contributed a minimum of a matching amount.
SAVER 9 and 10
My appreciation of saving started when I left the Medical College and transferred all that 401K money. I liked that feeling. My husband has managed our savings for 30 years. His lessons: I learned the importance of saving from my parents. I got better at it when I first had access to my company’s 401(k) plan – I’m so old I started my working career before 401(k) plans were invented! I got good at it over time with experience. And making more money didn’t hurt.
SAVER 11
I rode shotgun with Mom and rode to three banks to deposit her paycheck: a joint checking account, a savings account, and a Savings and Loan second savings account. When I started working, I copied Mom. I opened a checking account, a savings account, and later my first 401-K. I paid my savings accounts first and then forgot about it. I used my savings account for home and real estate investment down payments.
Saving money is like a scorecard. I set and meet targets. I don’t compete against any individual but against myself. In my early years, I created a budget (pencil and paper) and graduated to an Excel budget. I stopped formal budgeting and focused on percentage savings. By 30, I targeted a 20% or more savings goal. I saved 100% of my bonuses. I only used that money to buy assets I would appreciate, like real estate.
After my daughter was born, I added a fourth account, her college account.
I got laid off several times and never panicked as I had savings and could typically live off my severance until the next job. I have tried to teach my daughter and others about savings and financial literacy.
COMMON TRAITS
- Everyone was motivated to save. Goals included early retirement, no debt, X net worth, etc. They worked hard to make their goals a reality.
- The majority were born into blue-collar families.
- Most parents set excellent examples of frugality and savings.
- While different faiths, all have similar values.
- College graduates.
- Practiced hard work
- Most are retired and Millionaires today.
COMMON STRATEGIES
- Pay your credit card balance each month. If you cannot do this immediately, pay your debt down until you can pay it off monthly.
- Create a budget. Use pencil and paper, Apple/Google apps, or Excel.
- Pay your savings first, pay for your NEEDS, and control your WANTS.
- Practice frugality. Just because you can afford it does not mean you need it!
- SHAT happens. Have emergency savings set aside. The rule of thumb is six months of living expenses. Because you can access investment accounts quickly today, placing some of your emergency savings in investment accounts is okay.
- Set your savings aside and KEEP YOUR HANDS OFF.
- Only in DIRE emergencies should you take early 401-K withdrawals. You pay severe penalties when you do. First, you pay a 10% penalty. Next, you pay your regular federal and state taxes, and if you take a significant enough amount, you will increase your tax rate. Finally, you typically have to withdraw more than you need to pay the taxes and penalties. So, if you need $50,000.00, you likely must withdraw close to $100,000.00. It is an expensive way to borrow! As college costs have soared over the past decades, many parents have withdrawn from their 401 and other retirement accounts. I cannot criticize your decision until I have walked in your shoes. But think hard about this withdrawal. See a Personal Finance Advisor for advice BEFORE taking this money. It probably took you decades to build this source of future retirement income. You cannot rebuild this!
- Parents teach their children the importance of saving and how to save.
- General Life Tips
- Don’t dwell on negative emotions. SHAT happens, get over it.Use all your experiences, good and bad, as motivation.
- Focus on what you can control.
The paths to financial freedom are UNLIMITED. CHOOSE YOUR OWN! {PS: I wish I owned a credit card company! They charge 23-29% interest and pay their depositors (SUCKERS) on average less than one percent interest for your savings. This is the TWO SUCKERS business model.}
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YOUR GREATNESS IS NOT WHAT YOU HAVE; IT’S WHAT YOU GIVE! – SOME CHARITIES I SUPPORT
St Jude Hospital: The mission of St. Jude Children’s Research Hospital is to advance cures and means of prevention for pediatric catastrophic diseases through research and treatment. Consistent with the vision of our founder Danny Thomas, no child is denied treatment based on race, religion, or a family’s ability to pay.https://www.stjude.org/
Wounded Warrior Project: An American charity and veterans service organization that offers a variety of programs, services and events for wounded veterans of the military https://www.woundedwarriorproject.org
Folds of Honor: Providing life-changing scholarships to the spouses and children of America’s fallen or disabled military. And now, our mission expands to the families of America’s first responders. On our watch, those who protect our freedoms and our families will know they are not forgotten. https://foldsofhonor.org
Wilson’s No-Kill Animal Shelter: A N0-Kill shelter that is a top-rated non-profit. They compassionately care for all their animals. https://wcnkas.org
Tunnel To Towers: Since 9/11, we have been helping America’s heroes by providing mortgage-free homes to Gold Star and fallen first responder families with young children and by building specially adapted smart homes for catastrophically injured veterans and first responders. We are also committed to eradicating veteran homelessness and helping America to Never Forget September 11, 2001. https://dogood.t2t.org/give/320847/#!/donation/checkout
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ABOUT ME
I am a proud nerd (as my beautiful wife and daughter have told me) investment and finance blogger with an NC. State, Chemical Engineering, University Rutgers, MBA and Harvard University, Advanced Management education.
I left a corporate career because I desired to make a difference as a speaker and writer. I was blessed to be coached and mentored by strong women and men in my family and professional life. It is my time to serve and give back.
DISCLAIMER
I started my first business at ~13 years of age (a small but brilliantly created plant nursery). I am a successful investor in stocks, options, and real estate and am happy to share my finance and investment lessons. I am NOT a licensed financial advisor. Please do not construe my suggestions on this blog as recommendations for your situation. As an investor, you must establish your risk/loss tolerance. Investment in any asset involves risk, including complete loss.
Please seek your licensed CPA or fiduciary financial advisors for individual financial advice.
I write this weekly blog to make an impact by reaching an audience and demonstrating the need for financial literacy. I will help you get there.