Recipe for the American Dream
by Sam X Renick
Rational Financial Behavior
Are You Potentially Rich?
Mind Over Money
Recently, I had the great opportunity to address the American Savings Education Council in Washington DC and discuss our efforts to promote saving around the nation. Prior to making my presentation, I surveyed one hundred people and asked the following question: If you could share just one thing with a child or an adult about money that you think would make a significant difference in their life, that they could act on immediately, what would it be?
As you probably imagine, I received a wide variety of responses. But the response I received most is the one I happen to agree with and believe is the key ingredient for prosperity: "Pay yourself first!"
The Ingredients for Prosperity
Start with Mandatory Saving. The recipe for prosperity starts with the most basic ingredient, the concept that saving is mandatory. Instead of waiting until you've covered all the bills, choose to save a small percentage "off the top." This concept of paying yourself first is vital for the recipe to work.
Beat to a Firm Consistency. Stir your savings until they reach a smooth consistency. No matter how small the amount, if you consistently put aside a percentage of what you earn, compound interest will ensure that your savings will rise significantly over time.
Heat until Habit Forms. Do anything consistently 21 times and you've developed a habit. Once people make saving a habit, they often increase the percentage they save. In addition, a person's income usually increases as they mature. Even if you never increase the percentage of what you set aside, the amount will grow right along with your paycheck.
Add Fresh Cash, not Prepackaged Credit. Vigorously add to this mixture the choice to use cash instead of credit. Paying in cash helps keep a clear balance between income and expense, which puts you in control of your finances, no matter what level of income you make.
Garnish with No, No, No. The last ingredient is learning to say "no." Teach yourself the difference between "wants" and "needs" and show your children that instant gratification often lasts exactly that long: an instant. While designer name brands and electronic baubles are wonderful, the ability to provide a good education and a home for your children is much more valuable in the long run. This simple recipe has only a few ingredients, but it won't always be easy to follow. The good news? Thousands of people from all walks of life and economic levels have used the "pay yourself first" and "spend less than you earn" recipe to attain the American dream of financial independence.
As my favorite children's character, Sammy, the "Get in the Habit" Rabbit says, "You can do it, now let's get to it!"
Sam X Renick is the author of two financial books for children: It's a Habit, Sammy Rabbit! and Will Sammy Ride the World's First Space Coaster? He also produced the music CD titled Get in the Habit! and is the founder of The It's a Habit! Company, Inc., (www.itsahabit.com), a socially conscious corporation dedicated to providing parents and educators with wholesome, entertaining and educational tools that help them encourage children to develop good habits, especially saving money.
Share your thoughts about this article with the editor. Just Click Here and tell us what's on your mind.
More Tips & Tools to Help You
Live Better...For Less
- How to become a millionaire in 7 easy (hah!) steps
- 5 poor ways to save (and how to do better)
- 10 places to look for $500 in savings
Here are 10 ways to save $500 for when you drive, eat or travel.
- 9 savvy strategies to save for a rainy-day fund
- 5 big bills you can cut fast
- Money-saving secrets of the rich and frugal
- Helping elderly parents organize must-have financial paperwork and information Expert Interview
- How a single mom can create multiple income streams
- Turning your hobby into extra income
- Basic finance management for teens
- Positioning yourself for career advancement
- Reduce your debt with this free debt course by The Dollar Stretcher
- Reduce your debt payoff time
- Find a better credit card rate
- Get better savings & MMA rates