Money at Work
There are only two ways to make money in this world. Either you go out and work for it (wages) or you have money working for you. There is no other method to make money. Even robbing a bank is work; it is also dangerous and illegal work. Winning a lottery is the result of work, as you had to work to earn the price of a ticket, wait in line to make a purchase, check the results, etc, Try as you may, wealth is developed from only these two sources, commonly referred to in the generic sense as, Man at work or Money at work. If you ever find another way, let me know.
The sooner you have enough money working for you, the sooner you can stop working. It is as simple as that. It is never too late to start saving, but the sooner you start the sooner you will be better off. We need to teach this to our children as soon as possible in life. Unfortunately, they do not teach enough of this to the kids in school. Kids seldom want to do what a loving parent is encouraging them to do as they are often suspect of them. The parent usually, just wants them not to make the same mistakes they did. So photocopy this article for your kids as they will often take advice from anyone but their parents.
If Son or Daughter "A" starts saving just $1000.00 per year ($83.33 per month) at age 25 and continues to do so in an account that averages 10% interest per year, he/she will be able to retire al age 60 with a savings account of $271,024.37. Brother "B" decides to spend all of his money, but starts a savings plan just ten years later. To catch up with his more mature brother, he decides to double the amount of his savings to $2000.00 per year. Well, he never catches up. At age 60 even though he has put away much more than his brother, he has only $196,694.12 saved. He must therefore work and save for another five years. At age 65, he has still not caught up to his brother. The reason for the huge difference is the miracle of compound interest. The sooner you understand that principle, the sooner you will realize that, "It is not how much you save, but how long you save it for", that counts. That is because of how compound interest works. You start getting interest on your interest. At first, it doesn't seem like very much, but after a few years, the results begin to be amazing. Once you have enough money working. You can leave the labor force as you have now achieved financial independence by virtue of having money working for you.