- Save, and then save some more. My mother is a big saver. She always managed to put part of her household allowance into a savings account. Her savings paid for the down payment of on each of their house, 5 new cars over 40 years and the down payments on investment properties.
I currently save about 20% of my salary income to hopefully fund a retirement in our forties.
- Minimize taxes. My dad would consider strategies that would reduce or defer his taxes. His main tax deferment strategies was to invest in real estate and contribute to tax deductible retirement plans.
The earnings from my first summer job were used to open an IRA, resulting in no federal or state income tax liability. I also partnered with my dad on two real estate investments, which showed me the tax benefits (e.g. depreciation) of owning rental property.
- Choose a college major that leads to a well paying and high demand job. My father had degrees in Chemical and Nuclear engineering. While he worked for different companies, he was always able to get good jobs with commensurate compensation. My mom always encouraged me to be a doctor, which I strongly considered.
I followed in my father's footsteps and majored in Chemical Engineering. The year I graduated, Chemical Engineers were in high demand by oil and chemical companies, resulting in the highest paying starting salaries.
- Invest in stocks. My dad believed the stock market was one way to achieve financial independence. He also believe good stock pickers could beat the market.
Although we each had different approaches, I started investing in individual stocks soon after graduating from college. About 50% of my stock picks for the first 5 years declined significantly in value. I soon learned not losing money was as important as making money:-)
- Always take care of oneself, because no one else will. While my dad worked hard and was loyal to his company, he also invested effort in other financial ventures such as the stock market and commercial real estate. Although he never needed it, he made sure that his property an disability insurance would cover potential damages. Finally, while he did benefit from Social Security, he believed one should bear the bulk of the responsibility for one's own retirement.
I've dabbled in real estate and been moderately successful in the stock market, which has provided additional sources of income. Also, I have also made sure I have had sufficient health, disability and liability insurance coverage, which has served me well at least 2 times. Finally, I've been saving consistently since I was a teenager, and have amassed six times my salary.
For more on Crossing Generations , check back every Thursday for a new segment.
Photo Credit: morgueFile.com, Meg Donohue
This is not financial advice. Please consult a professional advisor.
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