Legendary comedian Jack Benny was onto something when he said:
“Try to save something while your salary is small; it’s impossible to save after you earn more.”
It’s difficult to start saving money at any stage, but as counter-intuitive as it may sound if you didn’t start when you weren’t making a lot, the chances are when you are making more you still won’t save.
There are people that make $40,000 and are able to save 20% to 30% of their earnings, and there are people that make $400,000 that are in debt. The former had developed good money management habits while the latter had not and will likely have a hard time developing them now without a lot of hard work.
Some studies suggest that we develop our individual money habits at an early age: as early as first or second grade. While I find that difficult to believe, I do understand the basis for these arguments.
For example, if we give kids everything they want without having to work for it, or we give them everything the minute they want it without waiting, we are teaching them bad habits. These bad habits will eventually develop into bad financial habits. They will expect more for less and they will also expect instant gratification: two behaviors that don’t bode well for financial well being.
If we weren’t taught good financial behavior at a young age, we must develop it ourselves or work with professionals that can help us. The sooner we start developing these behaviors, the better because it is not an earning problem it is a saving problem for most.
If you haven’t recently reviewed your financial plan you should contact your CERTIFIED FINANCIAL PLANNER™ Practitioner.