With graduations just behind us we often think of offering guidance to young people as they embark on life's journey. Here are two thoughts to pass along which I found in a WSJ column.
The path to long-term wealth includes:
- living within your means,
- a commitment to putting away so much money each year,
- allocating those long-term savings wisely among stocks, bonds and cash using low-cost, passively managed mutual funds, index funds and ETF's,
- and keeping costs (fees and taxes) associated with those investments as low as possible.
Be aware of "life-style creep".
As you climb the corporate ladder or wend your way through a career, each pay raise will bring new opportunities and choices.
How you handle those raises can be critical.
Think about spending the new money in ways that will bring enjoyment, but not commit you to an immediate and future higher spending level.
Commit to spending "just" half the raise for enjoyment and allocating the other half to ongoing savings.
Reaching financial independence will get easier and come sooner as well.
Be $ Smart - Over-spending and over-eating have consequences; diets are never fun.
