Becoming educated in financial literacy will dramatically increase your chances
of attaining your dreams. Money provides freedom, choices and security, and the
more educated you become in finance the more freedom you have to live life on
The old rules of Social Security and company pensions determining your future
are over. The new rules are: invest in your future and design it the way you want
to live it; become passionate about what you do so you can do it forever; and
take full responsibility and control over your destiny by learning how money works.
Contrary to popular belief, financial literacy is extremely simple: you must have
more money coming in than going out. By saving and investing your money, you put
money to work for you instead of you working for money. In addition, you must
become a wise spender and account for every penny you spend.
I teach a simple philosophy called the 10/10/10/70 concept. Out of every dollar,
give away 10 percent, invest 10 percent, save 10 percent and live from 70 percent
of your income. We are socially conditioned to be consumers, but it is impossible
to attain our dreams if we are in debt, living paycheck to paycheck and stressed
out by consumerism.
From this day forward, start to pay the most important person first: you. When
you invest in yourself and your future, you increase your wealth and your earning
power. If you have not started a savings or investment account, go for a high-interest
account such as ING Direct. They will give you a $25 starting bonus just for signing
up, and your money will earn up to 5.25 percent interest risk-free.
Second, watch every penny that goes through your hands. Because of our consumer
mentality, we tend to overspend, need instant gratification and feel we
deserve it. However, what we ultimately want is true wealththe
freedom to be, have and do what we want. Therefore, from now on, before you buy
something, ask yourself, Does this have value and meaning, and does it move
me forward towards my ultimate goal? That is what you truly deserve.
Do not buy anything unless you run it through a financial calculator and see that
it is worth every penny. Do not buy that outfit or piece of equipment unless you
can truly say it adds love, value or meaning to your life. If it doesnt,
put it back. Overspending is similar to overeating. We think it will make us feel
better when we do it, but soon afterwards we feel worse, and then we do it more
and dig ourselves deeper and deeper.
Look at Warren Buffett. He is a perfect example of someone who does what he is
passionate about and is extremely successful at it, yet who lives a simple but
enjoyable life and has all the freedom, choices and security imaginable.
LORI MACKEY is an award-winning author, speaker and coach
who creates fun financial education products for kids. She is founder
of Prosperity4Kids, Inc. and is recognized as a leading expert on kids and money.