Slow and Steady Wins the Race

The way to get rich is not mysterious.  It’s simple.  All you have to do is live within your means and save your money.  After a while, you’ll have a pretty good sum saved up.

Losing weight is also simple.  All you have to do to lose weight is burn more calories than you consume, through a combination of exercise and diet.

However, as you can infer by the high rates of obesity in America, and her dismally low personal savings rate, a simple thing is not the same as an easy thing.  It requires hard work, discipline, and sacrifice.

Lots of people talk about someday being rich, and for many young adults, it’s a vague expectation.  Likewise, a lot of people talk about going running next week, or getting a gym membership, or someday cutting back on junk food.  I, for one, definitely do this when it comes to diet and exercise.  I’ll start next week, I tell myself.

I’m better when it comes to money.  At some point, I just stopped sitting around thinking about it, and actually did something about it.

I’ve been following a schedule for the past nine months of putting away a modest amount each month into the stock market.  Assuming I can keep saving at this rate, which I expect to be able to, and assuming an average investment return over the long term, I’m on track to make my first million dollars by the time I am 46 years old, and I’ll have several more million to pass on to my sons when I die at 79.

The math is so simple!  If you start young, you don’t have to save as much each month to meet your goal.  And yet, it seems like hardly anyone else does it.  The average net worth of Americans in my age cohort (25-34) is merely $8,525, and by retirement age (65+), the typical American has a net worth of only $232,000–basically, the worth of his house plus a little extra–which is woefully inadequate for retirement.

A little bit saved consistently over time will yield huge dividends.  Why don’t more people live within their means and save the difference?